In the Name of Allāh,
the Entirely Merciful, the Especially Merciful
Praise is due to Allāh, Lord of the worlds, may the blessings and peace be upon our master Muḥammad, the last of prophets, on his family, and all his companions.
Resolution No. 64 (2/7) Installment Sale
The Council of the International Islamic Fiqh Academy of the Organization of the Islamic Conference, holding its 7th session in Jeddah, Kingdom of Saudi Arabia, on 7–12 Dhū al-Qi’dah 1412h (9–14 May 1992),
Having examined the research papers submitted to the Academy concerning
Installment Sale, in continuation to resolution no. 51 (2/6) in this regard, Having listened to the discussions on the subject,
Resolves
First: The installment sale is permissible in Shariah even if the deferred price exceeds the spot price.
Second: Trading instruments (cheques, promissory notes, exchange bills) are lawful types of debt authentication by recording it in writing.
Third: The discount of trading instruments is not permissible in Shariah, for it amounts to a transaction involving Ribā an-Nasīʾah (interest on delayed repayment) which is prohibited.
Fourth: The discount of a deferred debt to accelerate its repayment, whether at the request of the creditor or of the debtor (pay less but ahead of time), is per- missible in Shariah and does not fall within Ribā if not based on a prior agree- ment and as long as the relationship between the creditor and the debtor are bilateral. If a third party is involved between them, the discount is not permissi- ble, subject to the Shariah ruling regarding the discount of trading instruments. Fifth: It is permissible for both parties to a debt to agree on the fact that all installments will be due for payment if the debtor refers to repaying any of the
installments owned by him, as long as he is not insolvent.
Sixth: If a debt falls due following the death, bankruptcy or procrastination of the debtor, it is permissible in all these cases to discount the debt in order to accelerate settlement.
Seventh: The criterion of insolvency, which necessitates deferment, is that the debtor shall have no assets above his basic needs to discharge his debt in cash or in kind.
Indeed, Allāh is All-Knowing.
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