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Friday, February 26, 2010

The Differences Between Contract of Istisna’ and Contract of Salam

Salam (spot payment for deferred delivery) and istisna’ (staggered payments for deferred delivery) are the sales of a special nature. Salam is a sale whereby the seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advanced price fully paid on the spot. The wisdom behind permissibility of salam due to the needs of the seller. If the price is not paid to him in full, the basic purpose of the transaction will be defeated. On top of that, the quantity of the commodity must be agreed upon in unequivocal terms plus exact date and place of delivery must be specified in the contract.

Istisna’ is technically, a contract to purchase for a definite price something that may be manufactured later according to agreed specifications between the parties. In summary, it is a contract of sale of specified items to be manufactured or constructed with an obligation on the part of the manufacturer or contractor to deliver them to the customer on completion.

Istisna’ and salam differ on the basis that the subject matter. The differences between contract of salam and istisna' is that the commodity in salam rests on responsibility (dimmah). It is normally a weighable, measureable or countable thing. On the other hand, the commodity in istisna' is treated as detetmined thing ('ayn) such as furniture or shoe or tailoring cloths. For istisna’ is always a thing which needs manufacturing, while salam can be effected on anything, no matter whether it needs manufacturing or not. 

In the case of salam, the price for the products or commodities are paid in full in advance whilst it is not necessary for istisna’. The payment for istisna’ can be staggered until the products requested completed. 

The contract of salam, once effected, it cannot be cancelled unilaterally while the contract of istisna’ can be cancelled before the manufacturer starts the work. Once the manufacturer starts the work, the option to cancel is void and the contract of sale is bind. 

The time of delivery is an essential part of the sale in salam while it is not necessary in istisna’ that the time of delivery is fixed. In practice, usually, the manufacturer or contractor will says the tenure of the projects before the products requested is complete. In general, the consensus among jurists currently agree that the date of completion for the istisna’ contract can be determined ex-ante. However, according to Imam Abu Hanifah, if time is fixed in istisna', the contract will be salam contract, will no longer be an istisna' contract.


  1. similarities of 4 mazhab about fiqh muamalat and business transaction

  2. similarities of 4 mazhab about business transaction and fiqh muamalat