Journal of Islamic Studies > Volume 27, No. 2, 2015

Entitlement of Clients to Financial Compensation Stated in an Istisna' Contract Penalty Clause for Failure of Maker /  AbduI-Karim Mohammad Alsima'il

This research aims to study the jurisprudential issue of the entitlement of a mustasni' (client/purchaser, to the financial compensation stated in a penalty clause in an istisna' contract to be paid by the contracted sani' (maker/manufacturer, if the sani' fails to fulfill contract terms. The research follows an analytical approach. It defines the terms of: istisna' (contract to have goods made-to-order, and its status as well as the characteristics and benefits of the penalty clause. Then, it discusses the due compensation in the case of failure of maker prior to delivering the specified goods, taking into account the loss suffered by the client in financial and moral terms. It also discusses the case of failure after delivering some of the goods, showing causes, implications and related rulings. Among the significant research results is that the client is entitled to the stipulated compensation provided the following: the client must suffer a real loss as a result of the manufacturer's failure; the loss must be financially calculated at the time it is incurred; the manufacturer must be the source of the loss; the costs must not become a debt owed by the manufacturer to the client.