Is Istisna' a Sale or a Promise?

This part belongs to the full section: All sections of this part.

The sheets below are taken from the legal encyclopedia al-Mawsua al-Fiqhiyya and cover two institutions of mu'amalat: istisna', that is, manufacturing to order, and hawala, the transfer of a debt from one liability (dhimma) to another. The first five sheets deal with istisna': its contractual nature, its evidence, its conditions, its legal effects and its differences with salam. The last two deal with hawala: the conditions of the four poles of the contract, then the cases in which the assignee creditor keeps a right of recourse against the original debtor. All school positions, classical references and takhrij are reproduced faithfully.

Is Istisna' a Sale or a Promise?

The starting point is the definition of the operation: whoever orders a robe (jubba) with its fabric and all that belongs to it, from a tailor, has made an istisna', a manufacturing to order. If the fabric comes from the customer and the agreement bears only on the workmanship, the contract is a contract of hire (ijara) and not an istisna' (Durrar al-Hukkam, commentary on Majallat al-Ahkam, 1/100).

The Hanafi masters differed over the istisna' contract: is it a sale or a mere promise?

Some said: it is a promise, not a sale; it becomes a sale only through actual dealing, when the finished work arrives. For this reason the option (khiyar) is established for each of the two contracting parties: the craftsman is free not to work and cannot be compelled, unlike salam; and the customer may refuse what is brought to him, withdraw, without the transaction binding him.

Others, and this is the correct opinion of the school, said: it is a sale, but the buyer holds an option in it. Evidence: Muhammad (may Allah have mercy on him) mentioned analogical reasoning (qiyas) and juristic preference (istihsan) in its regard, something that does not occur in promises, since promises admit qiyas and istihsan by nature; he also established the option of sight (khiyar al-ru'ya) in it, which is specific to sales; mutual exchange of payments applies to it as well, and only what is due is exchanged in a contract, not what is merely promised; finally, it is permitted in what involves transaction, unlike what does not: if it were a promise, it would be permitted wholesale. Yet he called it a purchase, saying: when the customer sees it, he is in a state of option, for he bought what he had not seen; and the craftsman becomes owner of the dirhams by taking possession of them, which would not occur if the contract were a promise.

The establishment of the option for each of the two contracting parties does not prove that it is not a sale: in the barter sale, if each of the two contracting parties has not seen the other's item, that is, his merchandise, each of them holds the option.

The option of sight in favor of the customer belongs to the specific features of sales: its permissibility is therefore that of sales, not that of promises. And it follows from its being a sale that the craftsman is compelled to execute and that the one who ordered cannot withdraw: if it were a mere promise, it would not be binding.

Some said: it is a hire at the beginning and a sale at the end, but before delivery and not at the moment of delivery; their evidence: if the craftsman dies, the contract is void and the work is not claimed from his estate.

Their formulations then differed over this type of sale: is it a contract on merchandise in the liability, or a contract on merchandise in the liability with the execution of the work stipulated?

Some said: a contract on merchandise in the liability; for if the craftsman brought an item whose making preceded the contract and the customer accepted it, that would be valid; but if the stipulation of work belonged to the contract itself, it would not be valid, the stipulation bearing on future work, not past.

Others said: a contract on merchandise in the liability with the work stipulated, and this is the correct opinion of the school: the object of the contract is the manufactured item itself, not the work. If the craftsman therefore brings what is requested, matching the stipulated descriptions, and the customer accepts it, the contract is valid, whether the item comes from the work of another or from the craftsman himself before the contract.

The Evidence for the Permissibility of Istisna' and the Schools' Positions

If the sold item were the work itself, that would not be valid. Istisna' is a request for manufacture: that in which the work is not stipulated is not an istisna'; the derivation of the name is thus evidence in itself. Moreover, the contract on merchandise in the liability is called salam, while this one is called istisna': the difference of names indicates, in origin, a difference of meanings.

When the craftsman brings an item made before the contract and the customer accepts it, this is not valid by virtue of the first contract, but by virtue of another: the actual exchange concluded by their mutual consent (Bada'i' al-Sana'i', 5/2; al-Mabsut, 12/139-140; al-Muhit al-Burhani, 8/708; al-Bahr al-Ra'iq, 6/185).

The evidence for the permissibility of istisna': the Hanafi jurists hold that qiyas rejects its permissibility, for it is the sale of what one does not possess, outside the manner of salam; yet the Messenger of Allah (peace and blessings of Allah be upon him) forbade selling what one does not possess, a dispensation being granted for salam. It is permitted by istihsan, by virtue of the people's consensus: they practice it in every era without anyone disapproving, and qiyas is set aside by consensus. This is why qiyas has been abandoned for charging for entry to the bath without specifying the duration or the amount of water used, for shaping the spout of the water-skin without specifying the amount to drink, and for buying green vegetables: these are established everyday usages, and so is this.

Need also calls for it: a man may need a boot or a sandal of a specific kind, of a specific type, in a specific size and description, and it is rare for this to be found already made; if having it made were not permitted, people would be in hardship.

Finally, istisna' combines the meaning of two valid contracts, salam and hire: salam is a contract on merchandise in the liability, and hiring the craftsman involves the stipulation of work; and whatever combines the meaning of two valid contracts is valid (Bada'i' al-Sana'i', 5/2-3; al-Mabsut, 12/139-140; al-Muhit al-Burhani, 7/297; al-Bahr al-Ra'iq, 6/185; al-Fatawa al-Hindiyya, 3/207).

The majority of jurists, namely the Malikis, the Shafi'is and the Hanbalis, do not permit this istisna' contract: it is valid in their view only on the basis of the salam contract, with the conditions required in the advance salam: the description of the work, the fixing of the term, the advance payment of the capital, and the fact that the made item and the work are in the liability, as has been explained.

The Malikis said: salam is corrupted for works of the kind of sword-making if the material to be worked is specified, such as iron, or if the worker himself is specified, and it is better to specify both, because of the severity of the gharar, the uncertainty. Whoever has a basin, a quiver, a helmet, boots or anything else made that is manufactured in the markets according to a known description: if he attaches delivery to a term like that of salam, without stipulating the work of a particular man or a particular material, this is valid, provided he pays the capital immediately, or within a day or two; if he sets a distant term for the capital, it is not valid, and it becomes a debt for a debt.

If he stipulates work upon a particular copper or iron, or specific outward features, or the work of a particular man, it is not valid, even if he has paid; for it is a gharar: one does not know whether delivery will be possible by that term, and advance payment (salaf) is not valid upon a specified item.

If he buys the material of the work, such as iron, copper or leather, from a craftsman, and hires him, the buyer hiring the seller, to make a sword, a quiver or a saddle for example, this is valid according to the well-known opinion (mashhur), which allows combining sale and hire in a single contract, if the seller begins the work, even by legal presumption, within three days; whether the buyer designated the worker or not.

Shaykh 'Ulaysh (may Allah have mercy on him) said: this issue differs from the previous one in that, in the previous one, the merchandise did not first enter the buyer's ownership, whereas here it enters his ownership, and he then hires out its workmanship.

According to Ibn 'Abd al-Salam and others, the difference between these two cases is that, in the first, the contract was concluded upon the item to be made in the manner of salam, without the material entering the buyer's ownership; here, the contract was concluded upon the material to be worked, which the buyer acquired, and he then hired its workmanship with the stipulation of work in the contract. This second case is the issue of Ibn Rushd; the first is the issue of the Mudawwana, which contains four forms: specifying the material and the worker, specifying neither, specifying only the material, or specifying only the worker (Minah al-Jalil, 5/385-386; Tahrir al-Mukhtasar, 4/62, 64; Mawahib al-Jalil, 6/400-401; al-Taj wa-l-Iklil, 3/594, 596; Sharh Mukhtasar Khalil, 5/223; Balghat al-Salik, 3/180).

Al-Damiri, of the Shafi'is, said: as for commissioning sandals, it is not permitted except as al-Shafi'i (may Allah have mercy on him) explicitly established in al-Umm: to buy the two soles, the strap and everything that goes into making a sandal, then hire for the stitching; the same applies to vessels. Abu Hanifa permitted istisna' in this, saying that the craftsman and the customer both hold the option; his companions said: if the contract were valid, it would be binding (al-Najm al-Wahhaj, 4/257).

The Hanbalis said: the istisna' of a commodity is not valid either by selling it against a commodity that the seller will make for the buyer; for he sells what is not in his possession outside the manner of salam (al-Furu', 4/18; al-Insaf, 4/300; Kashshaf al-Qina', 3/190).

Conditions for the Validity of Istisna' According to the Four Schools

What precedes shows that it is the Hanafis who permitted the istisna' contract, unlike the other jurists. They laid down three conditions for it: if one of them is missing, the contract is corrupted and takes the status of the corrupted sale, which transfers ownership through possession of a corrupt ownership, in which neither enjoyment nor use is permitted, and whose cause of corruption must be removed out of respect for the order of the Law. Some of these conditions are agreed upon among them, others are disputed:

• The determination of the kind of the made item, its type, its quantity and its description: without this, the item is not known, and knowledge is obtained thereby. If one of these elements is unknown, the contract is corrupted, for ignorance leading to dispute corrupts the contract. If someone has an object made leaving vague its type, its kind, its measurements, its size, its features and its number if it is multiple, and conceals all or part of this, the contract is corrupted by this ignorance.
• The work must belong to what is transacted among people: vessels of iron, lead, copper, glass, boots, sandals, iron bits for beasts of burden, the hilts of swords and knives, bows, arrows, all weapons, the basin, the jug and the like. It is not permitted for garments: qiyas rejects its permissibility there, and this is established only by istihsan due to people's practice; yet there is no practice in garments, and what is not transacted returns us to qiyas, like one who commissions a weaver to weave him a shirt with his own thread, or a tailor to sew it.
• In the view of Abu Hanifa, the contract must not include a term: if a fixed term is set for delivering the made item, the contract is corrupted and becomes a salam, to which the conditions of salam then apply, including taking possession of the counter-value in the session of the contract. For fixing a term introduces the meaning of salam: the contract then bears on a deferred merchandise in the liability; and contracts are judged by their meanings, not by the forms of words: sale is indeed concluded by the word of transferring ownership, and likewise hire, and likewise marriage according to our principle. It therefore becomes a salam in what does not bear istisna'. Deferral belongs to debts, for it was instituted to defer the claim; yet the claim can be deferred only in a contract involving a claim, and this exists only in salam, for there is no debt in istisna': each of the two contracting parties holds, by agreement, the option to refrain before the work. When the contract becomes a salam, the conditions of salam are observed: if they are met, it is valid; otherwise not.

The term meant is a month and beyond. If it is less than a month, it is an istisna' if a transaction takes place within it; otherwise the contract is corrupted if the term is mentioned as a grace period; if it is mentioned for hastening, saying for example "on condition that it be finished tomorrow or the day after", the contract is valid. A term of less than a month is not valid as a salam.

In summary: what is deferred by a month or more is a salam; what is deferred by less, without transaction, is a corrupted istisna', unless the term is mentioned for hastening: it is then valid.

Abu Yusuf and Muhammad said: this is not a condition, and it is an istisna' in every case, whether a term is set or not.

If a term is set for an istisna' concerning what does not admit istisna', such as garments, it turns into a salam according to all of them.

The reason for their opinion is that the established custom is to set a term in istisna', and what is meant thereby is the hastening of the work, not the deferral of the claim: the contract therefore does not leave istisna'. Or: the term may intend the deferral of the claim as much as the hastening of the work, and the contract does not leave its object in case of doubt and possibility, unlike what does not bear istisna': in that case, the hastening of the work cannot be intended by the term, which must therefore intend the deferral of the claim of the debt, and that is salam (Bada'i' al-Sana'i', 5/2-3; al-Ikhtiyar, 2/47; Sharh Fath al-Qadir, 7/115; al-Bahr al-Ra'iq, 6/185; Ibn 'Abidin, 5/223-224).

Legal Effects of the Istisna' Contract and Its Stages

The legal effect of the istisna' contract is the establishment of the customer's ownership of the sold item in the liability, and the establishment of the craftsman's ownership of the price, as a non-binding ownership (Bada'i' al-Sana'i', 5/2-3).

The status of the contract differs depending on whether it stands before the beginning of the work or after the completion of the work, before the customer sees it.

Before the beginning of the work, the contract is non-binding for both parties, without dispute, to the point that each of the two contracting parties holds the option to refrain before the work, like the sale in which the option is stipulated for both contracting parties and either may rescind. For qiyas demands that it not be permitted, for what has been said; its permissibility is known only through istihsan, due to people's practice; bindingness therefore remains on the basis of qiyas.

After the completion of the work, before the customer sees it, it is the same: the craftsman may sell it to whomever he wishes, for the contract did not fall upon the work itself, but upon its like in the liability, as has been mentioned: if he bought it elsewhere and delivered it, that would be valid. If the craftsman sells it and the customer wants to cancel that sale, he may not; and if the craftsman consumes the work before the customer sees it, he is like the seller who consumes the merchandise before delivery, according to Abu Yusuf.

When the craftsman brings the work according to the stipulated description, his option falls away, and it is the customer who holds the option upon seeing the work: the craftsman sold what he had not seen, so he has no option; the customer bought what he had not seen, so he holds the option, unlike salam, in which establishing an option has no use: each time he refuses the item, another is brought to him, the object not being specified, the delivered item remaining in the liability until possession is taken.

This is so because the object of the contract, though nonexistent in reality, was annexed to the existing in order to make it possible to affirm the validity of the contract; and because the option was established for both before the bringing, the contract being non-binding: the craftsman, by bringing it, dropped his own option, and the option of his counterpart remains in its state, as in the sale with the option stipulated for both parties: when one drops his option, the other's remains. Such is the answer of the manifest transmission (zahir al-riwaya) from Abu Hanifa, Abu Yusuf and Muhammad (may Allah have mercy on them).

It is reported from Abu Hanifa that each of the two holds the option, for giving each of them the choice repels harm from him, which is obligatory.

It is reported from Abu Yusuf that there is no option for either of them: the craftsman has altered his material, cut his leather and brought the work according to the stipulated description; if the customer could refuse to take it, this would harm the craftsman. Unlike the case where he cuts the leather without working it and the customer says: "I do not want it": for we do not know whether the work would have matched the stipulated description; the refusal therefore causes no harm to the craftsman, and the option is established.

Al-Kasani (may Allah have mercy on him) said: the correct opinion is the manifest transmission; for establishing the option in favor of the craftsman contradicts the purpose for which istisna' was instituted, namely repelling the customer's need: if the option is established for the craftsman, everything deriving from it from other than the customer does not repel his need.

Abu Yusuf's argument, that the craftsman suffers harm through establishing the option in favor of the customer, is granted; but the customer's harm through voiding the option exceeds the craftsman's harm through its establishment: if the work does not suit him and its price is demanded of him, he cannot resell it to another at its value; and this is not difficult for the craftsman, given his practice and his establishment in this craft. If the customer pays out the price without his need being fulfilled, the purpose of istisna', which is the fulfillment of the need, would not be achieved: the option must therefore be established for him.

If iron is delivered to a smith so that he makes a specific vessel for a specific wage, or leather to a bootmaker so that he makes a specific boot for a specific wage, this is permitted and without option, for it is not an istisna' but a hire, and therefore permitted. If he executes as he was ordered, he deserves the wage; if he ruins the work, the customer may demand from him the guarantee of similar iron: by ruining it, he is as if he had taken this iron for himself and made vessels from it without permission; and the vessel belongs to the craftsman, for things owed in guarantee become ownership through the guarantee itself (Bada'i' al-Sana'i', 5/2, 5; al-Ikhtiyar, 2/46-47; Sharh Fath al-Qadir, 7/115; al-Bahr al-Ra'iq, 6/185; Ibn 'Abidin, 5/223-224).

Note: the Majalla adopted Abu Yusuf's opinion and establishes, in its article 392, that the istisna' contract is concluded as binding: neither party may withdraw, even before manufacture; however, if the made item arrives differing from the stipulated descriptions, the customer has the choice because of the disappearance of the description.

The Difference Between Salam and Istisna'

Six points distinguish salam from istisna':

• Salam requires a known term whose minimum is a month; istisna' is valid with a term or without a term, with no duration at all, contrary to what was said above.
• Salam requires the delivery of the capital in the session of the contract; istisna' does not require immediate payment of the price, and custom is content with part of the price, such as half, a third or a quarter.
• Substitution of the capital of salam and of the delivered item before possession is taken is not valid; the price of istisna', on the other hand, is like the price of a sale: substitution is valid before possession of it is taken.
• The salam contract is binding: neither contracting party may rescind except by mutual agreement on rescission; the istisna' contract is, according to the correct opinion, namely the manifest transmission, permitted and non-binding: either party may rescind before the work and, after the work, as regards the craftsman, if he brings it according to the stipulated description; the customer holds the option according to the previous detail.
• The object of salam is a debt established in the liability, measured, weighed, measured by length or approximately countable; istisna' bears on a specified item, not a debt, such as the making of a shoe: if the craftsman brings an item he did not make himself, that is valid.
• Salam has no option, unlike istisna', which has the option according to the previous detail, for it is a non-binding contract (see al-Khulasa al-Fiqhiyya according to the madhhab of the Hanafi masters, 2/92).