• This Practice Note provides a high-level overview of the Istisna' product used under Islamic finance.

Istisna' is a “future sale” contract used in long-term financings under which two parties, being the seller and the buyer, agree that the buyer shall purchase a tangible asset or a group of tangible assets manufactured or constructed by the seller or its contractor in accordance with the specifications determined or agreed by the buyer, which shall be delivered to the buyer at a future date following completion of their manufacturing or construction.

The asset, which constitutes the subject of the sale is required to be clearly defined in terms of its kind, type, quality and other specifications. In addition, the purchase price of the concerned asset should be expressly agreed and paid as so agreed between the buyer and the seller. It should be noted that the provision of materials necessary for the creation of the Istisna' asset is the exclusive responsibility of the seller.