RESOLUTION No.
64/2/7
CONCERNING INSTALLMENT SALE
Quote - The Council of the Islamic Fiqh Academy, in its
seventh session held in Jeddah, Kingdom of Saudi Arabia, from 7-12
Dhul Qi'dah 1412H (to 9-14 May 1992).
Having
considered the research papers received by the
Academy on the subject, ''Instalment Sale'' ,and in
continuation to the resolution no. 51/2/6 adopted on this
subject by the Sixth session of the Council;
Having
heard the discussions held about it.
RESOLVES
First: The installment sale is permissible in
Shari'a even if the deferred price exceeds the spot price.
Second:Commercial papers (cheques - promissory notes,
bills of exchange) are lawful types of authentication of a debt by
putting it down in writing.
Third:The discount of
commercial papers is not permissible in Shari'a for it amounts
to a transaction involving "Riba an Nasi'ah" (interest
on delayed repayment) which is prohibited.
Forth:To
reduce a deferred debt with the aim of accelerating its repayment,
whether at the request of the creditor or of the debtor (pay less but
ahead of time), is permissible in Shari'a and does not fall
within the province of Riba (which is forbidden) if it is not
based on an advance agreement and as long as the relationship between
the creditor and the debtor is bilateral. If there is a third party
between them, the reduction is not permissible as it will then be
subject to the ruling on discount of commercial papers.
Fifth:It
is permissible for the two parties to a debt to agree on the fact
that all instalments shall be due for payment if the debtor refuses
to repay any one of the instalments owned by him, as long as he is
not insolvent.
Sixth:If a debt falls due because of the
death, bankruptcy or procrastination of the debtor, it may be reduced
in all these cases in order to speed up the coming to
terms.
Seventh:The criterion of insolvency to be
applied by trusties (bankruptcy) is that the debtor has no
possessions in excess of his basic needs to discharge his debt in
cash or in kind.
Allah knows best- unquote