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. 65 (3/7) Istiṣnāʾ (Manufacturing) Contract
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
Istiṣnāʾ (Manufacturing) Contracts,
Having listened to the discussions on the subject,
Having considered the purposes of Shariah regarding public interests, and the Fiqh maxims concerning contracts and transactions,
Having noted that Istiṣnāʾ contract plays an important role in stimulating industries and in paving the way for broad opportunities for financing and pro- moting the Islamic economy,
Resolves
First: Istiṣnāʾ contract, which has been mentioned with regard to work and goods on credit, is binding on both parties if it meets the basic requirements and conditions.
Second: The Istiṣnāʾ contract must fulfill the following requirements:
- A clear statement of the nature, type, amount and required specifications of the product to be manufactured.
- A specification of the
Third: In the Istiṣnāʾ contract, it is permissible to defer payment in full or in installments according to predetermined installments and specific deadlines.
Fourth: In the Istiṣnāʾ contract, it is permissible to include a penalty clause if both contracting parties agree, unless subject to force majeure.
Indeed, Allāh is All-Knowing.
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