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Islamic Contract – Bay’ al-Istijrār: Istijrār With Deferred Payment
1. Definition of Istijrār With Deferred Payment
Explanation
Istijrār with deferred payment refers to:
a continuous supply arrangement where the buyer takes goods gradually over time and payment is deferred until a later date or settlement period.
Instead of:
2. Types of Istijrār With Deferred Payment
Scholars discuss several forms of deferred-payment istijrār.
A. Price Specified in Every Transaction
Structure
In this form:
the parties know:
✅ exact quantity
✅ exact price
during each transaction.
Scholarly View
This form is generally:
✅ permissible.
It is accepted by scholars who allow:
sale by conduct (bay‘ al-mu‘āṭāh).
Schools Allowing It
✅ Hanafis
✅ Mālikis
✅ Hanbalis
✅ Some Shāfi‘ī scholars
(such as al-Ghazālī and Ibn Surayj)
Majority Shāfi‘ī Position
The majority of Shāfi‘ī jurists:
❌ do not allow it.
Example
A restaurant regularly purchases:
Week 1
100 \times 15 = 1{,}500
100 \times 15 = 1{,}500
Week 2
120 \times 16 = 1{,}920
120 \times 16 = 1{,}920
End of Month
Restaurant pays:
1{,}500 + 1{,}920 = 3{,}420
1{,}500 + 1{,}920 = 3{,}420
Analysis
Every withdrawal:
Result
✅ Generally permissible according to majority non-Shāfi‘ī schools.
B. Price Not Specified Each Time But Determined by Market Price on Day Goods Are Taken
Structure
In this form:
Majority Juristic View
The famous opinion among the four schools:
❌ generally does NOT allow this arrangement.
Why?
Because:
Basis of Prohibition
The jurists rely upon:
Example
A supermarket continuously takes:
Parties merely agree:
“Price will follow market price each day.”
Problem
At the moment goods are taken:
❌ exact price unknown.
This may lead to:
❌ Invalid according to majority view.
Minority Hanafi and Hanbali View
Some Hanafi and Hanbali jurists:
✅ allow this arrangement
if:
Basis of Their Opinion
They rely on:
Example
A petrol station regularly takes:
✅ Permissible according to some Hanafi and Hanbali jurists.
C. Price Not Specified and No Agreed Pricing Mechanism
Structure
In this form:
Majority Juristic View
Most jurists:
❌ prohibit this arrangement.
Why?
Because:
Example
A retailer continuously takes:
At month-end:
Problem
At time goods are taken:
❌ no binding sale price exists.
Thus:
❌ Invalid according to majority.
Later Hanafi Position
Some later Hanafi scholars:
✅ allowed this arrangement
if:
Example
A grocery store continuously receives:
At month-end:
✅ tolerated it.
3. Comparative Summary
Type A
Price Specified in Every Transaction
Majority View
✅ Permissible.
Reason
Price known at every withdrawal.
Type B
Market Price Used But Not Expressly Stated
Majority View
❌ Not permissible.
Minority Hanafi/Hanbali View
✅ Permissible if market price stable.
Type C
No Price and No Pricing Mechanism Initially
Majority View
❌ Not permissible.
Later Hanafi View
✅ Permissible after reconciliation based on custom.
4. Important Sharī‘ah Principle
The major concern in deferred-payment istijrār is:
uncertainty regarding price (jahālah al-thaman).
Islamic commercial law generally requires:
✅ certainty of price;
✅ certainty of obligations;
✅ avoidance of excessive gharar.
However:
1. Definition of Istijrār With Deferred Payment
Explanation
Istijrār with deferred payment refers to:
a continuous supply arrangement where the buyer takes goods gradually over time and payment is deferred until a later date or settlement period.
Instead of:
- paying immediately upon each withdrawal,
- receives goods continuously;
- settles payment later.
- the permissibility of various forms of this arrangement,
particularly: - price determination.
2. Types of Istijrār With Deferred Payment
Scholars discuss several forms of deferred-payment istijrār.
A. Price Specified in Every Transaction
Structure
In this form:
- every time goods are taken,
- the price is clearly specified.
the parties know:
✅ exact quantity
✅ exact price
during each transaction.
Scholarly View
This form is generally:
✅ permissible.
It is accepted by scholars who allow:
sale by conduct (bay‘ al-mu‘āṭāh).
Schools Allowing It
✅ Hanafis
✅ Mālikis
✅ Hanbalis
✅ Some Shāfi‘ī scholars
(such as al-Ghazālī and Ibn Surayj)
Majority Shāfi‘ī Position
The majority of Shāfi‘ī jurists:
❌ do not allow it.
Example
A restaurant regularly purchases:
- chicken supplies from wholesaler.
Week 1
- 100 kg chicken
- RM15 per kg
100 \times 15 = 1{,}500
100 \times 15 = 1{,}500
Week 2
- 120 kg chicken
- RM16 per kg
120 \times 16 = 1{,}920
120 \times 16 = 1{,}920
End of Month
Restaurant pays:
1{,}500 + 1{,}920 = 3{,}420
1{,}500 + 1{,}920 = 3{,}420
Analysis
Every withdrawal:
- has known price;
- has known quantity.
Result
✅ Generally permissible according to majority non-Shāfi‘ī schools.
B. Price Not Specified Each Time But Determined by Market Price on Day Goods Are Taken
Structure
In this form:
- goods are taken continuously;
- price not expressly stated during each withdrawal.
- parties initially agree that:
Majority Juristic View
The famous opinion among the four schools:
❌ generally does NOT allow this arrangement.
Why?
Because:
- price is unknown during contract session;
- uncertainty (gharar) exists.
Basis of Prohibition
The jurists rely upon:
- Qur’ānic prohibition against unlawful consumption of wealth;
- prohibition of uncertainty in contracts;
- scholarly consensus requiring known price.
Example
A supermarket continuously takes:
- vegetables from supplier.
Parties merely agree:
“Price will follow market price each day.”
Problem
At the moment goods are taken:
❌ exact price unknown.
This may lead to:
- disputes;
- uncertainty.
❌ Invalid according to majority view.
Minority Hanafi and Hanbali View
Some Hanafi and Hanbali jurists:
✅ allow this arrangement
if:
- market price is stable and commonly known.
Basis of Their Opinion
They rely on:
- customary market practice (‘urf);
- prevailing market value (thaman al-mithl);
- practical commercial necessity.
Example
A petrol station regularly takes:
- fuel supplies.
- publicly known and stable.
- parties rely on prevailing market rate.
✅ Permissible according to some Hanafi and Hanbali jurists.
C. Price Not Specified and No Agreed Pricing Mechanism
Structure
In this form:
- goods are continuously taken;
- no exact price stated;
- no agreed pricing formula;
- final payment determined only during later account reconciliation.
Majority Juristic View
Most jurists:
❌ prohibit this arrangement.
Why?
Because:
- contract lacks certainty regarding price;
- excessive gharar exists.
Example
A retailer continuously takes:
- beverages from supplier.
- price;
- pricing formula;
- market benchmark
At month-end:
- parties negotiate final amount.
Problem
At time goods are taken:
❌ no binding sale price exists.
Thus:
- contract remains incomplete.
❌ Invalid according to majority.
Later Hanafi Position
Some later Hanafi scholars:
✅ allowed this arrangement
if:
- parties finally agree on price during reconciliation stage.
- juristic preference (istihsān);
- commercial custom (‘urf);
- widespread public need (‘umūm al-balwā).
Example
A grocery store continuously receives:
- bread supplies daily.
At month-end:
- parties reconcile account using accepted market rates.
- became widespread commercial custom,
✅ tolerated it.
3. Comparative Summary
Type A
Price Specified in Every Transaction
Majority View
✅ Permissible.
Reason
Price known at every withdrawal.
Type B
Market Price Used But Not Expressly Stated
Majority View
❌ Not permissible.
Minority Hanafi/Hanbali View
✅ Permissible if market price stable.
Type C
No Price and No Pricing Mechanism Initially
Majority View
❌ Not permissible.
Later Hanafi View
✅ Permissible after reconciliation based on custom.
4. Important Sharī‘ah Principle
The major concern in deferred-payment istijrār is:
uncertainty regarding price (jahālah al-thaman).
Islamic commercial law generally requires:
✅ certainty of price;
✅ certainty of obligations;
✅ avoidance of excessive gharar.
However:
- some jurists allow flexibility where:
- strong commercial custom exists;
- public need is widespread;
- market prices are stable and commonly known.
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