Bai Salam

It is one of the basic conditions for the validity of a sale in Shari‘ah that the commodity must be in the physical possession of the seller. This condition has three ingredients:

Firstly, the commodity must be existing.

Secondly, the seller should have acquired the ownership of that commodity.

Thirdly, mere ownership is not enough. It should have come into the possession of the seller, either physically or constructively.

There are only two exceptions to this general principle in Shari‘ah. One is Bai Salam and the other is istisna’.

Bai Salam

Bai Salam (Arabic بيع سلم) is a sale whereby the seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advanced price fully paid at the spot.

The buyer is called “rabb-us-salam”, the seller is “muslam ilaih”, the cash price is “ra’s-ul-mal” and the purchased commodity is termed as “muslam fih”.

Bai Salam is beneficial to the seller because he receives the price in advance, and it is beneficial to the buyer also, because normally, the price in salam used to be lower than the price in spot sales. The permissibility of salam was an exception to the general rule that prohibits the forward sales, and therefore, it was subjected to some strict conditions. These conditions are summarized below:

Conditions of Salam

1. First of all, it is necessary for the validity of salam that the buyer pays the price in full to the seller at the time of effecting the sale. The basic wisdom behind the permissibility of Bai Salam is to fulfill the instant needs of the seller. If the price is not paid to him in full, the basic purpose of the transaction will be defeated.

2. Bai Salam can be effected in those commodities only the quality and quantity of which can be specified exactly. The things whose quality or quantity is not determined by specification cannot be sold through the contract of salam.

3. Salam cannot be effected on a particular commodity or on a product of a particular field or farm.

4. It is necessary that the quality of the commodity (intended to be purchased through salam) is fully specified leaving no ambiguity which may lead to a dispute. All the possible details in this respect must be expressly mentioned.

5. It is also necessary that the quantity of the commodity is agreed upon in unequivocal terms. If the commodity is quantified in weights according to the usage of its traders, its weight must be determined, and if it is quantified through measures, its exact measure should be known.

6. The exact date and place of delivery must be specified in the contract.