UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance

UAE Laws and Islamic Finance

Istisna’a’a

‘Istisna’a is a contract of exchange with deferred delivery applied to specified made-to-order items.  General agreement upon principles of practice can generally be stated as:

a.)  The nature and quality of the item to be delivered must be specified;

b.)  The manufacturer must make a commitment to produce the item as described;

c.)   The delivery date is not fixed.  The item is deliverable upon completed by the manufacturer;

d.)  The contract is irrevocable after the commencement of manufacture except where delivered goods do not meet the contracted terms;

e.)   Payment can be made in one lump sum or in instalments and at anytime up to or after the time of delivery;

f.)    The manufacturer is responsible for the sourcing of inputs to the production process.

Istisna’a differs from Ijarah in that the manufacturer must procure his own raw materials.  Istisna’a’a differs from bay salam in that the subject matter…

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