What is ‘Aqd al-istisnaa’? What are the rulings and conditions governing it?
Praise be to Allaah.
‘Aqd al-istisnaa’ – which is a contract that applies both to the labour and the product itself – is binding on both parties when it is drawn up in accordance with certain conditions.
The following conditions apply to ‘Aqd al-istisnaa’:
Clear statement of the type, amount and required features of the work to be done or product to be made.
Specification of the time frame involved.
In ‘Aqd al-istisnaa’ it is permissible to delay paying the full price, or it may be paid in installments at specific times over a limited period.
It is permissible for ‘Aqd al-Istisnaa’ to include a penalty clause stating what the two parties have agreed on, so long as there are no circumstances beyond their control. And Allâh knows best.
Majma’ al-Fiqh al-Islami, p. 144