Conditions of Installment Sale

In addition to the general conditions of sale, installment sales require: **1. Item Must Be in Seller's Possession:** The item must be in the seller's possession and under his disposal at the time of contract. It is not permissible to agree on the price and payment schedule, then the seller buys the item and delivers it to the buyer. - **Evidence:** "Do not sell what you do not have" [Ahmad, Abu Dawud, Tirmidhi, Nasa'i, Ibn Majah - sahih] **2. No Late Payment Penalties:** It is not permissible to obligate the buyer - at contract time or later - to pay an amount exceeding what was agreed upon if he delays paying the installments. This is prohibited riba. **3. No Procrastination by Wealthy Buyer:** It is forbidden for a wealthy buyer to procrastinate in paying due installments. **4. No Retention of Ownership:** The seller has no right to retain ownership of the sold item after the sale. However, he may stipulate that the item be pledged with him as collateral to guarantee his right to the deferred installments.