Istijrar

Istijrar is an Islamic commercial contract for ongoing or continuing supply of goods at an agreed price or pricing formula, without the need to execute a separate sale contract for each delivery. It provides a framework for repeat purchases from the same supplier over a period, where the pricing may be fixed in advance or determined periodically based on a reference benchmark or market price. Istijrar is particularly useful in supply chain finance, commodity procurement, and repetitive trade transactions where negotiating individual contracts for each delivery is impractical. The Shariah permissibility of Istijrar is supported by the principle of Ibaha (permissibility of commercial transactions) and custom (Urf) — it has long been practiced in Islamic commercial law as a framework for ongoing commercial relationships. Scholars differ on certain structures: some forms defer price determination to each delivery (which raises Gharar concerns for classical scholars), while AAOIFI guidance supports Istijrar structures where the pricing mechanism is sufficiently certain at inception. Modern applications include: Islamic supply chain finance programs where a corporate buyer establishes an Istijrar framework with multiple suppliers, drawing down Murabaha facilities for each supply tranche; commodity purchase arrangements for utilities and manufacturers; and agricultural procurement at agreed seasonal prices. The IOF TRADE_FINANCE rail supports Istijrar master agreements with individual drawdown facilities for each supply delivery.