Fatwa No : 11368
Salam sale contract: definition, conditions and rulings
Fatwa Date : Sha'baan 18, 1432 / 19-7-2011
What is definition of the Salam sale contract, its conditions, and rulings?
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu 'alyhi wa sallam, is His slave and Messenger.
Salam under the Sharee‘ah is the selling of a certain commodity in the wording of Salam or Salaf. It is a kind of sale, which is excluded from the definition of the sale of a non-existent object and an object that is not possessed by the vendor, because people need this kind of contract.
The validity of this sale is evidenced by a narration on the authority of Ibn ‘Abbaas and his father, that the Prophet , came to Madeenah and the people used to pay in advance the price of fruits to be delivered within two to three years. He , said (to them), "Whoever pays in advance should do this for a fixed specified measure, specified weight, and a specified [delivery] period." [Al-Bukhaari and Muslim] It is also narrated on the authority of ‘Abdur-Rahmaan ibn Abza and ‘Abdullaah ibn Abi Awfa that they said, "We used to get war booty while we were with the Messenger of Allaah , and when the peasants of Ash-Shaam came to us we used to pay them in advance for wheat, barley, and oil to be delivered within a fixed period.” They were asked, "Did the peasants own standing crops or not?" They replied, "We never asked them about it." [Al-Bukhaari]
The rationale behind allowing Salam, though involving the selling of a commodity that is not possessed by the vendor, is to facilitate deals and consider people’s conditions and needs. This is because craftsmen, businessmen, farmers, and the like, often need cash to secure raw materials for their products, preparing machines and tools for their factories, and farmers need money to look after their land and maintain their plots. These people might not find cash in another way and therefore the wise Sharee‘ah allows them to borrow money and pay back from their products, whether crops, fruits, commodities, and the like.
In essence, this contract must fulfill four pillars: two contracting parties, a formula, the funds, and the object that will be given in return.
The most important condition of Salam is to deliver the funds to the due recipient at the same session when the contract is signed. Also, the commodity that will be given in return for the funds should be defined in a full description in case it is used for multi purposes, so as to maintain due diligence. The commodity should be defined in kind, amount, and description to both contractors. The commodity to be given in return is to be a debt that is described but not specific; it should be possible to deliver, that is to say, it will be expected to exist when delivery is due. Also, the time and place of delivery should be specified, should the place of making the contract be unsuitable for that purpose, or it can be delivered but needs to be transferred at a certain cost. These are the most important conditions of Salam.
Allaah Knows best.