Al-Baraka Bank: Features of Murabaha and Leasing: Bai’ Salam

Bai’Salam

The general rule is that the sale of a thing not owned by the seller is void. However, the Holy Prophet (P.B.U.H.) has allowed Bai’Salam subject to certain conditions. Usually this type of sale was conducted by farmers who needed money for growing crops. The Shariah has allowed them to sell the agricultural products on advance payments. However, the validity of this transaction was subjected tot he following conditions:

1. The payment of the purchase price should be in cash at the time of contacting the sale of salam. Thus, the sale of salam cannot be effected on deferred price or on the basis of part payment.

2. The subject of sale must be determined with all its specifications for example
    quality, quantity etc.

3. The sale of salam can be effected only in respect of those things which can
    be determined by specification. Things which differ in quality from piece to
    piece cannot be sold on salam basis.

4. The time and place of delivery must be agreed upon at the time of sale.

5. The commodity sold must be available in the market place throughout the
    period of salam.

6. According to Hanafi jurists, the period of delivery should not be less than one
   month. However this condition is not necessary according to other jurists.

7. The buyer cannot sell the commodity to another person unless he takes
    delivery from the seller.

Bearing in mind these conditions with all the relevant details elaborated upon in Islamic jurisprudence, it seems to be difficult to use Bai’Salam as a mode of finance except by agricultural banks. However, if all the necessary conditions are fully observed Bai’Salam may be used by other financial institutions also.

This piece is taken from the website of Al-Barak Bank.

See on-line at: http://www.albaraka.co.za/Islamic_Banking/Features_of_Marabaha_and_Leasing/Bai_Salam.aspx

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