– 20 March 1990 CE.

After reviewing the papers submitted to the Academy on the subject of “installment sales” and listening to the discussions that were held, the Council resolved:

1 – It is permissible for the deferred price to be higher than the spot price, and it is likewise permissible to state both the cash price of the commodity and its installment price for a specified period. The sale, however, is valid only if the two parties decisively agree on either immediate payment or deferment; if the contract is concluded while they waver between the two—without firm agreement on one fixed price—it is not valid according to the Sharia.

2 – In a deferred sale it is not lawful to stipulate in the contract an installment interest schedule that is separate from the cash price and linked to the term, whether the two parties agree on a particular rate or tie it to the prevailing market rate.

3 – If the buyer-debtor delays the payment of installments beyond their due dates, it is impermissible to oblige him to pay any increase on the debt, whether such a condition was stipulated beforehand or not, for that constitutes usury (riba), which is prohibited.

4 – It is sinful for a solvent debtor to procrastinate in settling installments that have fallen due; nevertheless, it is not permissible to stipulate compensation in the event of late payment.

5 – It is permissible for the seller in a credit sale to stipulate that all remaining installments fall due immediately if the debtor delays payment of any of them, provided that the debtor accepted this condition at the time of contracting.

6 – The seller has no right to retain ownership of the sold asset after the sale, but he may stipulate that the buyer pledge the asset to him as collateral to secure the deferred installments.

The Council further recommends that certain issues related to installment sales be studied, and that rulings on them be postponed until adequate research and studies have been completed, including: