Pre-Order in Shariah Terms

Posted by Radzik Hishamuddin Sankara on 23 May 2018

Assalamualaikum and Greetings!

Ever since Silver Bullion gained our Shariah Accreditation from Amanie Advisors, there has been a number of queries from our Muslim based customers with regards to ordering products that are on “pre-order” and if it is in accordance to the principles of Shariah. As a Muslim and an employee of Silver Bullion Sdn Bhd, I feel compelled to share and inform our customers as I believe the best possible way to understand is by looking at the process flow of a pre-order transaction.

Step 1:
A customer reviews the item he wishes to purchase. Upon confirmation, the customer than proceeds to place an order for the desired product.By placing an order, the customer promises to buy the item at the specific time and date as stipulated on the website. This initial transaction process in the Shariah point of view is equivalent to Wa’d. Hence, no sale and purchase Aqad between both parties have taken place.

*Wa`d is a unilateral promise which refers to an expression of commitment given by one party to another to perform certain action(s) in the future.

Step 2:

After placing an order with Silver Bullion, customers are given 48 hours to make payment for their orders. All payments or deposit from customer at this point would be treated as a security deposit (Hamish Jiddiyyah). In a Wa’d transaction, it is permissible for an entity such as Silver Bullion to withhold a certain sum of money from the purchaser (customer) as a security deposit based on the agreement of the order placed. Furthermore, in a commodity market where price movements are volatile, a security deposit from the customer is mandatory to safeguard the entity such as Silver Bullion from any order cancellation.

Step 3:

The final process for a pre-order transaction is when a customer receives the product they ordered. The outright sale and purchase or in other words (Aqad) would now be evident between the purchaser and Silver Bullion. The initial deposit from a customer would no longer be treated as a security deposit simply because this process now would translate to the handing over of goods to the customer. In conclusion by evaluating the process flow, I am absolutely certain that the pre-order transaction is construed in accordance to the Shariah principle.

Silver Bullion Pte Ltd and Silver Bullion Sdn Bhd are certified Shariah compliant by our Shariah Advisory Board, Amanie Advisors Sdn Bhd, in accordance with the Shariah Standard on gold set by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

Our Certificate of Pronouncement can be viewed using the link below: