It is a particular kind of a Bai (sale) where the sale of
the goods is transacted before the goods comes into existence. The legality of
Istisna is accepted by the Shariah scholars because it does not contain any
prohibition, As far as the financing mode, it has been legalized on the basis
of the principles of Istihsan (public interest). Istisna is an contract
culminating in a sale at an agreed price whereby the purchaser places an order
to manufacture,build, assemble or construct (or cause so to do) anything to be
delivered at a future date.
It becomes an responsibility of the manufacturer, constructor or the builder (as the case may be) to deliver the asset of agreed specifications at the agreed period of time. As the sale is executed at the time of entering into the Istisna contract, the contracting parties need not renew an exchange of offer and acceptance after the subject matter is prepared. Istisna can be used for providing the facility of financing the manufacture or construction of houses, plants, projects and building of bridges, roads and highways etc. After giving prior notice, either party can cancel the contract before the manufacturing party has begun its work. Once the work starts, the contract cannot be cancelled unilaterally.
It becomes an responsibility of the manufacturer, constructor or the builder (as the case may be) to deliver the asset of agreed specifications at the agreed period of time. As the sale is executed at the time of entering into the Istisna contract, the contracting parties need not renew an exchange of offer and acceptance after the subject matter is prepared. Istisna can be used for providing the facility of financing the manufacture or construction of houses, plants, projects and building of bridges, roads and highways etc. After giving prior notice, either party can cancel the contract before the manufacturing party has begun its work. Once the work starts, the contract cannot be cancelled unilaterally.
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