An Islamic bank as a buyer has signed an Istisnah agreement with a customer as a seller, whereby the customer has to arrange for the construction and delivery of a building to the bank

Fatawa Question

An Islamic bank as a buyer has signed an Istisnah agreement with a customer as a seller, whereby the customer has to arrange for the construction and delivery of a building to the bank. Both parties have also signed a forward lease agreement, whereby the bank leased the described building to the customer by way of Ijarah Muntahiya Bittamlik (financial lease basis). Both parties have agreed on the specifications of the building and the Istisnah purchase price. The customer, a few months after signing the Istisnah agreement, pleaded that the cost of construction has substantially gone up due to strong demand for building materials, and that the bank should pay the additional amount to complete the project in accordance with the agreed specifications by way of increasing the purchase price. Shariah guidance is sought to know if it is permissible to increase the purchase price under the Istisnah agreement and at the same time to also increase the amount of the lease due to the reason mentioned above.

Fatwa

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Publisher

Islamic Finance News

Publication Date

2013-09-04

Country of Publication

Malaysia

Main Subjects

Economics & Business Administration
Islamic Studies

Data Type

Fatawa

Language

English

Record ID

BIM-783629

• APA
• MLA
• AMA