Salam

Rana Muneer AhmadM.Phil. IBF

In This Topic We Will Cover:1. The basic conditions for a validity of a sale in Sharia2. Definition of Salam3. Sharia Legitimacy of Salam4. Wisdom behind Salam permissibility5. Specific Conditions of Salam6. Market Practice

Topic Outline

The basic conditions for a validity of a sale in

Sharia are three:(1) The purchased commodity must be existing,(2) The seller should have acquired the ownership of that commodity,(3) The commodity must be in the physical or constructive possession of the seller,These conditions are compulsory to avoid the possibility of Gharar and dispute regarding the subject matter.

The basic conditions for a validity of a sale

There are only two exceptions to this principle in Sharia:(1) Salam(2) Istisna Some conditions ,which make the contract free

from Gharar, have been imposed in these two contracts.

Delivery of the subject matter is deferred to the future in both of these sales, so these are known as forward sales.

Definition &Concept :Seller agrees to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot. Price is in cash but the supply of goods is deferred.

Definition &Concept SALAM

Rabb-us-salam : Buyer السلم رب Muslam ilaih : Seller الی مسلم Ra’s-ul-maal : Cash price المال راس Muslam fih : Purchased

commodity فیہ مسلم

Terms used in Salam

Salam: Shariah Legitimacy

Hazrat Ibn e Abbas (RA) said “this verse revelation for theparticular purpose of making salam permissible”.(AAOIFI ST) Ibn Abbas reported, the Prophet (PBUH) came to Medina

on Hijrat and found that people were selling dates for deferred delivery (salam) over a period of one or two years. The Prophet (PBUH) said:

“whoever pays for dates on a deferred delivery basis (salam) should do so on the basis of specified scale and weight” In other version of the Hadith “whoever pays on deferred delivery basis should do so on the bases of a specified scale, weight and date of delivery”.

Salam: Shariah Legitimacy

As reported by Imam Bukhari in his Sahih, Abdur

Rahman bin Abza and Abdullah bin Abi Aufa, Companions of the holy Prophet (SAWW), upon asking about Salam goods said, “ when the peasants of Syria came to us, we used to pay them in advance for wheat, barley and oil to be delivered within a fixed period”. They were again asked, “Did the peasants own standing crops or not?” They replied, “We never asked them about it”.

It means non existence of commodity in salam was allowed.

Salam: Shariah Legitimacy

Background Wisdom of allowing of Salam: Before prohibition of interest farmers used to

get interest based loans for growing crops and harvesting and during the days of our prophet (S.A.W) the caravans used to get interest based loans for purchasing the commodities. After prohibition of interest, they were allowed to do Salam.

Wisdom behind Salam permissibility

Benefits of Salam can be divided into two categories:- Benefits of salam in Buyer’s perspective- Benefits of salam in Seller’s perspective In buyer’s perspective ,he will get the

commodity at a price below the market price and have no fear of price rise in future.

Benefits of slam

In Sellers perspective: Sellers can meet the needs of money to grow their crops

and to feed their family up to the time of harvest.

meet the needs of working capital meet the needs of liquidity problem. meet the needs for their import and export

business.

Benefits of slam

(1)Conditions regarding to SM : Only those fungible ( Misli) goods can be sold

through a Salam contract in which the quantity and quality can be exactly specified. SM should be measured ,weighted or counted in its usual measure.

Differences existed among the jurists regarding the list of commodities that can be sold under Salam contract. But they have come to the conclusion that all goods that can be standardized into identical units can become the subject of Salam.

Conditions of Salam

It is necessary for the validity of Salam that the buyer pays the price in full to the seller at the time of affecting the sale, because the basic wisdom for allowing Salam is to fulfill the instant need of the seller. If it’s not paid in full, the basic purpose will not be achieved. Moreover it will be the sale of debt to debt. However delay in payment is allowed with the condition that it will be paid in two or three days. But it will be with mutual consent.

(2) Conditions regarding to the Payment:

Cash payment is not necessary in Salam .Islamic bank may credit the seller’s account or issue a pay order in favor of the seller, which may be cashable on demand.

If the price of salam is in the form of fungibles (Misli) goods then the kind, type, specification’s and quantity of these shall be clearly defined.

THANKS