What is the ruling on agreements that precede large contracts, such as supply contracts, in which essential matters like dates and quantities are agreed upon, in terms of their binding nature or lack thereof?
The ruling on conditional agreements is not limited to their permissibility, but rather they are considered a condition for the validity of some contracts. The default for conditions is permissibility and validity, and nothing is forbidden except what the Shariah has indicated to be forbidden. "Muslims are bound by their conditions." Conditions that do not contradict the Shariah are valid in all contracts. It is permissible to stipulate a penalty clause in all financial contracts, except for contracts where the original obligation is a debt. It is permissible in contracting agreements, supply contracts, and manufacturing (Istisna') contracts. However, it is not permissible in installment sales due to the debtor's delay in paying installments, or in an Istisna' contract for the client (Mustasni') if he delays in fulfilling his obligations.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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