Buying and Selling: Ruling on the Validity of Conditional Sale Agreements with Down Payments

Practical Laws of Islam as per the teachings of Imam Khamenei

Buying and Selling: Ruling on the Validity of Conditional Sale Agreements with Down Payments

English:

Question #1464:

Two parties reached an agreement concerning a sale whereby the purchaser paid a down payment to the vendor. About it they prepared a document and stipulated therein that in the event of not completing the deal, the defaulting party should pay a certain amount to the party who kept his part of the deal. Could this very document be considered a sale document? In other words, is the mere agreement between the two parties and their will to complete the deal sufficient for the materialisation of the sale in such a way that each party is allowed to demand the other to observe the mentioned condition?

Answer #1464:

The mere intention to sell, agreement to conclude it or promising to do so, even by a provisional written agreement, does not amount to a proper sale and is not sufficient for the validity thereof. The condition is, therefore, not binding unless it is enshrined in the appropriate sale contract or the contract is based on it. Thus unless the sale and transfer of the goods are done in a lawful manner, neither party is under any obligation vis-à-vis the other as far as the arrangement and promise to finalise the deal are concerned.

-Imam Khamenei, Practical Laws of Islam, Importance and Conditions of Buying and Selling