Bay Al-Salam

Prepared by: Sri Noor Aishah binti Mohd

Salleh (821031)

Date: 3rd October 2016

 Definition: Salam

Literal: giving (ita),
advance (taslif) and leaving

Technical: A sale contract whereby the seller

undertakes to sell some specific commodities to
the buyer at an agreed future date in exchange
for a price fully paid in advance on a spot basis.
 Definition

AAOIFI: purchase of commodity for deferred
delivery in exchange for immediate payment.

Also known as: Bay Salaf or Bay Mafalisa

 Evidence: Al-Quran

O you who have believed, when you contract a
debt for a specified term, write it down.
(Surah Al-Baqarah, verse 282)

Ibn Abbas: regarding the permissibility

of salam contract as one of the debt
based contract
 Evidence: As-Sunnah

Ibn Abbas mentioned:
Rasulallah (SAW) migrated to Medina and
people were trading fruits for period using
salam contract. He ordained:

whoever pays money in advance (for fruit to be delivered

later) should pay it for a known quality, specified measure
and weight (of dates and fruits) and of course, along with the
price and time of delivery.
 Objectives

Provide financing for small and medium
enterprise
As a source of financing to produce the goods to
be delivered later with price paid in advance.
Benefits the trader and producer
Alternatives and avoids any involvement in riba.
Benefit the purchaser
Discounted price in return of willingness to pay
in advance.
 Pillars of as-Salam

Rabb al-salam
The buyer
Musallam Ilayh
The Seller
Ras Al-Mal
Price
Al-Musallim Fih
Product
Sighah
Offer (Ijab) and Acceptance (Qabul)
 Conditions

Conditions related to Price (Ras al-Mal)
Clearly determined and paid in full

Seller must take possession of the price in full before

departing one another
Maliki: allowed it to be paid within few days as long
as it is not stipulated as a condition
If the price is a ribawi item, to exchange for another
ribawi item is NOT ALLOWED
 Conditions

Conditions related to purchased commodity (Musallam
fih)
Quality and quantity clearly specified
Freely available in the market
Urud: other than gold and silver
Majority of scholars: Quality and quantity specified, can be
sold through salam.
Hanafi: commodities should remain available in the market right
from the day of the contract up to the date of delivery
Other scholars: availability of goods at the time of contract is
not a condition. The good should be available at delivery.
 Conditions

Conditions related to date and place of
delivery
Exact date and place specified

Scholars differ on the shortest duration of time

of delivery
 Permissible with 6
aspects
(4 Ps
+ 2 Qs)
Product: Types and kind of goods involved

Period: duration of the contract and delivery date

Price: Price paid for the contract

Place: Place of delivery when it is due

Quality: Characteristics and Specification of items

Quantity: Quantity of goods ordered by buyer

Fails to deliver goods

If unable to deliver the goods:
Agreed by both parties to postpone the delivery

To deliver next crop

Return advance paid without any increment

If the seller fails to deliver while able to

do so:
Breach of contract and may take it to court
 Type of As-Salam
Ordinary
Involves only 2 transacting
parties: buyer (musallim)
and seller (musallam ilayh)
Parallel
Consist of two different and
independent contracts: 1)
Bank is the buyer 2)
Bank is the Seller
The two contract cannot be
tied up and contingent with
each other.
Ordinary As-Salam

Rabb as-salam /
Musallim
(Buyer)

Musallim Ras al-

Fih Mal
(Product) (Price)

Musallam
Ilayh
(Seller)
 Parallel Salam

Bank
(Musallam Ilayh)
1 2

3 4
Deliver Deliver
y y

Seller Buyer
(Musallam Ilayh) (Musallim)

 References

(2012). Islamic financial system: Principles &
operations. International Shari'ah Research
Academy for Islamic Finance (ISRA).
Financing : Bai Salam. (2015). Retrieved October
02, 2016, from https://islamicbankers.me/islamic-
banking-islamic-contracts/in-focus-bai-salam/
Visser, H. (n.d.). Islamic Finance: Principles and
Practice, Second Edition. Retrieved October 01,
2016, from https://books.google.com.my/books?
id=Y30tAgAAQBAJ