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Islamic Finance




Al-Shart al-Sahih


A valid condition, i.e., a contractual stipulation that is permissible (under shari’ah) and binding on the parties to the contract (aqd). Conventionally, valid conditions are classified into four categories:

  • Essential conditions: those which constitute requirements for a commutative contract and typically come, per se, in conjunction with the spirit of a contract such as the stipulation of taking delivery of the object of sale by the buyer or the stipulation that the seller withholds the object of sale until the buyer pays the price in full, and so on.
  • Permissible conditions: those that are not contractual requirements, but shall be permissible if the contracting parties agree on. Examples include: deferment of payment or delivery, options (khiyarat) to one or both of the contracting parties.
  • Conditions which are conforming to the contractual requirements: those which are meant to strengthen a party’s rights by way of guarantee, security, etc. For instance, the sale in which the price is deferred can be enhanced by a condition that the buyer provides a guarantee or post collateral to assure the seller of payment under all circumstances. Such a stipulation is in conformity with the requirements of sale.
  • Conditions which are accepted by convention or customary practices (urf): for example, purchasing a piece of furniture on the condition that the seller/maker will assemble it upon delivery or purchasing an electronic device with a warranty condition.


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