BANK & Finance, ActivelyShare.com — Buying and selling are generally divided into three types. Which are.
First, buying and selling goods that are visible to the eye. That is buying and selling when the contract is made the goods already exist and are immediately accepted by the buyer.
Second, buying and selling goods that are not visible to the eye. Due to the absence of these goods, the buyer can get the goods by ordering. As a consequence, the seller becomes a guarantee for the existence of the goods in the future. Can be paid in advance, in installments or at the end.
Third, buying and selling supernatural goods. That is buying and selling the goods that never existed so that this sale and purchase is unlawful.
In the previous article, we mentioned that buying and selling without the goods or being purchased by ordering in advance is allowed. One of the contracts that accommodate the sale and purchase is the salam contract. The contract is generally applied to the pre-order buying and selling system .
In addition to the salam contract, it turns out that there is one more contract that also accommodates the need for an item that when you want to buy the item it is not yet available or can be purchased by ordering in advance. The contract is called the istishna contract.
Definition of Istishna Contract
Linguistically, istishna comes from the word shana’a which means to make. Because there are additional letters alif, sin and ta , the meaning formed is asking or begging to be made.
In terms, istishna contract is a sale and purchase contract in the form of an order for the manufacture of certain goods with certain criteria and conditions agreed upon between the buyer (buyer/mustashni’) and the seller (maker, shani’).
Or it can also be referred to as a contract for the purchase of an item to be made of materials and manufacture from the maker. If the material for an item comes from the buyer, it is called mustashni , then this contract turns into an ijarah contract .
The Legal Basis of Istishna
The legal basis for istishna is based on qiyas against salam contracts, namely buying and selling that has no value when the contract session is in progress.
Hanafi scholars based the permissibility of istishna’ on the “istihsan” of human mu’amalah with others and their habits in each period of making orders without any denial.
The Malikiyah, Shafi’iyah and Hanabilah Ulama allow on the basis of qiyas the greetings and urf from the community. Required as a salam contract.
The opinions of these scholars certainly cannot be separated from the main sources, namely the Qur’an and As-Sunnah.
The verse that is the basis of the law of istishna is QS. Al-Baqarah: 275 which means, ” and Allah has made lawful buying and selling and forbidding usury ”
Then in the hadith of the Prophet SAW, Narrated from the companion of Anas radhiallahu ‘anhu, one day the Prophet sallallaahu’ alaihi wa sallam wanted to write a letter to a non-Arab king, then it was told to him: Indeed non-Arab kings are not willing to accept letters that are not stamped , then he also ordered that it be bolted with a silver stamp ring. Anas narrated: “It’s as if now I can see the white sheen in his hand.” (Muslim Narration)
Referring to this hadith, it can be concluded that the istishna contract is permissible.
Then some of the ulama’ stated through their ijma ‘ that the istishna’ contract was a justified contract and had also been carried out since time immemorial without any friend or scholar denying it. Thus, there is no reason to forbid it.
In Indonesia, the MUI National Sharia Council as the institution authorized to accommodate the legalization of a product has legalized the istishna contract with the issuance of the DSN MUI fatwa 06/DSN-MUI/VI/2000 regarding Istishna .
This fatwa includes several things, namely provisions regarding payment and provisions regarding the goods
Istishna Contract Payment Terms
In carrying out the istishna contract, mainly in the payment mechanism, there are things that must be considered, including:
- Payment instruments must be known in the amount and form, whether in the form of money, goods, or benefits.
- Payment is made according to the agreement.
- Payment cannot be in the form of debt relief.
Istishna Object Terms
Then in terms of the goods traded in the istishna contract , it is also necessary to pay attention to the things that make the istishna contract valid, including:
- The characteristics must be clear and can be recognized as debt.
- The specifications must be explained.
- The submission was made later.
- The time and place of delivery of the goods must be determined by agreement.
- The buyer ( mustashni ‘ ) cannot sell the goods before receiving them.
- Cannot exchange goods, except with goods of the same kind as per the agreement.
- In the event that there are defects or the goods are not in accordance with the agreement, the customer has the right of khiyar (right to choose) to continue or cancel the contract.
Difference Between Istishna Contract and Salam Contract
Even though they look the same, the istishna contract and the salam contract have differences.
In terms of the terms used for naming objects, if the salam contract is called Muslam Fihi, while the istishna contract is called Mashnu.
In terms of price, Salam contracts are paid directly at the time of the contract. So when you want to order an item, you have to pay directly the price of the item you ordered at the beginning when the contract took place.
Whereas in istishna contracts, payments can be more flexible. You can pay right at the beginning of the contract, it can be in installments, or it can be at a later date. Well, this is the essence of the difference between the istishna contract and the salam contract .
In terms of the nature of the contract, the salam contract has a binding nature in the original ( thabi’i ) while the istishna contract has the following binding nature ( taba’i ). What does it mean? The salam contract binds all parties from the start, while istishna becomes a binder to protect producers so that consumers are not left irresponsibly.
In addition, according to Hasanuddin as secretary of the DSN MUI fatwa commission, he stated that the difference between a salam contract and an istishna contract is the nature of the goods. In a salam contract, the goods must already have an example, while in an istishna contract the goods are still in the form of an image or there is no form.
Practice of Istishna Contracts in Daily Life
Istishna contracts are often applied to products that are for construction, such as building materials or furniture. While salam contracts are more often used for products such as fruits and so on. Why is it different? Because in fruit products, examples of these fruits already exist.
As for the limited number, it is necessary to order in advance. Plus the seller doesn’t need to make it first, let alone to comply with the specifications requested by the buyer because the fruit generally has the same shape.
Plus the seller doesn’t need to make it first, let alone to comply with the specifications requested by the buyer because the fruit generally has the same shape.
Sellers who are farmers only need to plant the seeds of the plants ordered and then care for them until the plants grow fruit which will then be handed over to the buyer. It is different with items such as furniture where buyers need to provide specific furniture items needed.
For example, if he needs a cupboard, the buyer must clearly state such as the number of cabinet doors, whether there is glass or not, and so on. After the specifications are agreed upon, the buyer can hand over the money directly, later after the goods are finished or in installments.
The Practice of Istishna Contracts in Contemporary Time
Istishna contracts are currently often applied to sharia home financing products or commonly called Sharia mortgages. One of the banks that implements Islamic mortgage financing with an istishna contract is the Mulia Berkah Abadi Syariah Rural Bank (BPRS). According to him, the application of the istishna contract in the Sharia mortgage process will make it easier for customers and will make BPRS superior to conventional ones.
“Istishna is a good thing, because the government is promoting the sector. Of course we must be able to trust the management of public funds that save in Islamic banking or BPRS. That’s why it must be used according to the purposes mandated by the government. Among other things, to provide housing for the community,” said Chotib when interviewed in Tangerang.
How is the Istishna Contract Mechanism in a Sharia Mortgage?
So, customers can order a house according to the desired specifications from the seller, which in this case can be done by a BPRS or other Islamic bank. After the agreement regarding the specifications of the house has been completed, the Buyer alias customer can determine the desired payment method. There are at least 2 ways given.
Customers can pay for the house with a payment scheme per house share. So every time there is a part of the house that becomes a customer, it pays for the part of the house that has been finished. A simple illustration, for example, Fauzan wants to buy a house. He bought a house through BPRS Sejahtera.
BPRS offers an istishna contract scheme for home purchases. Fauzan agreed, then he explained the specifications of the house he wanted. Then, BPRS Sejahtera calculates the costs needed to build a house according to the specifications submitted.
In the calculation scheme, the BPRS will add a service fee as the benefit they are entitled to from ordering the house. After the calculation is complete, the calculation is submitted to Fauzan and Fauzan agrees on the calculation given.
Fauzan pays by paying for each part of the house. So, if in the process of making the house there are parts that have started to be finished, Fauzan will pay for it. If the foundation is ready, Fauzan pays the first installment. Then when the wall was finished, Fauzan paid the second installment. And so on until the house is finished and ready to be used.
Customers can pay for a house with an installment scheme without having to wait for each part of the house to be finished. For example, Haruman wants to buy a house in installments. He ordered the house to BPRS Sentosa. BPRS offers an istishna contract scheme. Then Haruman conveyed the specifications of the desired house.
Then, the BPRS will calculate the required costs plus service fees. After being counted, the count was conveyed to Haruman. He agreed to include the amount of installments to be paid per month. Let’s say the total price of the house ordered is 250 million. Then the BPRS provided an additional margin of 30 million as a service fee, bringing the total to 280 million. The duration of the payment is 28 months so that every month Haruman has to pay 10 million in installments per month.
Constraints of Istishna Contracts on Sharia Mortgages
Although it has great potential in promoting the property/housing sector for the community. Unfortunately, it is still rare for Islamic banks to implement it. Because of the problem of maintaining trust in the specifications submitted by the customer/customer. Then the literacy related to the istishna contract and its application to the banking world is also still much less understood, especially for those who are banking practitioners.
Also Read: 6 Types of Anti-Complicated Online Sharia Investments
Such is the understanding, argument, scheme and practice of isitishna contracts in Islamic economics. Hopefully this article can provide additional scientific treasures about Islamic economics.