Sharia Supervisory Board
Sharia Board Rulings — Istisna‘
The controls governing Istisna‘ (manufacture-to-order) contracts at CHAM BANK, and the Board's rulings on the related contracting agreements.
Sharia Board Rulings — Istisna‘
General controls
How Istisna‘ contracts are governed
- Where the contractor is the same customer who commissioned the work through the bank, the bank may not contract with him — one person cannot be both maker and orderer. Where the contractor is a third party, the bank may appoint the customer to supervise the contractor's work, provided the customer is not paid the Istisna‘ consideration owed to the contractor, and provided the agent's liability is kept distinct from the bank's.
- Where prices change severely, the obligation under an Istisna‘ contract may be adjusted under the principle of wad‘ al-jawa’ih. A change of one third or more counts as severe.
- An option-to-rescind clause is permitted in an Istisna‘ contract; the Board requires that it not exceed three days, so that transactions settle.
Rulings
Questions put to the Board
The full Arabic text of each question and its ruling is published on the Arabic version of this page; the signed original is below.
- Financing the remaining instalments owed to a housing cooperative.
- The Sharia treatment of retention amounts lodged by contractors.
- Whether late settlement may trigger a penalty under a contracting agreement.
- Approval of the contracting agreement for refurbishment and cladding works.
- The Sharia characterisation of withdrawing execution from a contractor.
Original document
The text above is a transcription of the official document, published so it can be read, searched and translated on any device. The signed PDF below remains the authoritative copy.