Istisna In Malaysia Case Study

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
What had been done during the era of Prophet Muhammad S.A.W. become one of the basis to istisna’ contract implementation. For example, in the Hadith, it is reported that the prophet Muhammad SAW had ordered someone to make a ring. He ordered that it should be made for him. Prophet also implemented istisna’ but in informal way which was just by word (lisan). The concept is similar to what is being practiced today. The difference is only that the element and methodology in dealing with the parties involved. As mentioned before, istisna’ concept is to avoid gharar, so the elements in istisna’ contract must be made clear and known to all parties.

Istisna have the some basic pillars which are Mustasni’ (customer), Sani’ (manufacturer), Ra’s al-Mal (the price), Masnu’ (the product), and sighah which involve ijab (offer) and qabul (acceptance). All these pillars exist in the current contract practice in different terms. For example, Sani’ in construction project is actually the contractor who will produce the product for Mustani’ (client).
One on the conditions that needs to be fulfilled in Istisna is that the object to be manufactured must be clearly specified in its type, kind, quantity and quality. It also needs to be something that people are familiar with to contract it on the basis of manufacture and construction
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