Ethica Institute of Islamic Finance™

What is the liability of both parties in case the item being transacted is damaged during the execution of the sale?

If during a sale’s execution, the item is damaged, destroyed, wrongfully consumed, or in any way reduced in value from the time the sale was agreed upon, then responsibility (and the payment of the item’s price) is as follows:

• Before the buyer takes possession, it is the seller’s responsibility , unless the buyer causes the damage, in which case the buyer is responsible;

• Before the buyer takes possession, if a third party (known or unknown) causes the damage, the buyer chooses whether to cancel the deal, thereby holding the third party responsible to the seller, or maintain the deal, thereby holding the third party responsible to himself;

• Before the buyer takes delivery, if the cause of damage is not attributable to any party, whether buyer, seller or third party, the seller is responsible (e.g. water damage from rain);

• Once the buyer takes possession, it is the buyer’s responsibility.

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