Istisna In Malaysia Case Study

1941 Words8 Pages
Based on our findings, we will explain the theory of the contract of istisna’ and its application in relation to contract administration in Malaysia. The topics to be discussed are the concept of istisna’ briefly, its relation to the present contract in practice such as PWD 203A, the difference between the present contract practice with istisna’ contract and lastly a case study with regard to istisna’ contract that are applied by firms in Malaysia. 2.0 CONCEPT OF ISTISNA’ The word istisna' is derived from the word sana'a which literally means "making, manufacturing or constructing something”. According to Ibn Manzur, istisna' occurs when someone invited, induced or caused another to make the thing. AIFayruzabadi says that istisna' occurs when someone asked for something to be made for him. The word istisna' has also been used in the al-Qur'an and al-Hadith. For example, Allah SWT says: "The work of Allah who perfected all things." Technically, Istisna’ is an agreement to sell to a customer a nonexistent asset that is to be manufactured or built according to the agreed specifications and delivered on a specified future date at a predetermined selling price. In relation to contract administration, istisna' is generally a long-term contract whereby a party undertakes to manufacture, build or construct assets,…show more content…
The parties shall have the legal capacity to enter into the istisna` contract and may be a natural person or a legal person. A party in istisna` contract may enter into the contract through an agent. The best view is to fix the delivery time to avoid dispute even though it is not a requirement. If the subject matter does not conform to the contractual specifications at the time of delivery, the purchaser has the right to either refuse or accept
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