SalamIn Salam, the seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot. The payment is at spot but the supply of purchaesd goods is deffered.
Purpose of use:
1. This mode pof financing can be used by the modern banks and financial institutions especialy to finance.the agricultural sector.
2. To meet the needs and requirements of small formers who need financing theor financing to grow their crops and to feed their families until the time of harvest. When Allah's messenger declared Riba as haram, the farmers could not take usurious loans. Therefore, the Holy Prophet(S.A.W) allowed them to sell their agricultural products in advance.
3. To meet the need of traders for import and export business. Under Salam, it is allowed to sell the goods in advance so that after receiving cash price, they can easily undertake the aforesaid business. Salam is beneficial to the seller as he receives the price in advance and it is beneficial to the buyer also as normally the price is Salam is lower the price is spot sale.
The permissibility of Salam is an exception to the general rule that prohibts forward sale and therefore it is subject to strict conditions, which are as follows.
Conditions for Salam:
The conditions for Bai Salam are as follows.
1. It is necessory for the validity os Salam that the buyer paysthe price in full to the.seller at the time of affecting the sale.
In the absence of full payments, it will be tantamount to sale of debt against a desbt, which is expressly prohibted by the Holy Prophet (S.A.W). Moreover, the basic wisdom for allowing Salam is to fullfil the "instant need" of the seller. If the full price is not paid in advance, the basic purpose of Salam will mot achieved.
2. Only those goods can be sold through a Salam contract in which the quantity and quality can be exactly specified e.g precious stones can not be sold on the basis of Salam because each stone differ in quality and size, weight, their exact specification in not possible.
3. Salam cannot be effected on a partilar commodity or or for