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Islamic Contract – Bay’ al-Salam: Basic Rules and Conditions of Salam
1. Offer and Acceptance in Salam Contract
Explanation
A salam contract may be concluded using:
What is important in Islamic contracts is:
Key Elements Reflected in the Contract Wording
The wording must indicate:
Example 1: Using the Word “Salam”
A trader says:
“I enter into a salam contract to purchase 5,000 kg of rice for RM40,000 to be delivered after 6 months.”
The farmer accepts.
Analysis
✅ Valid salam contract.
Example 2: Using the Word “Salaf”
A buyer says:
“I make a salaf agreement with you for delivery of 100 tonnes of wheat after harvest in exchange for RM300,000 paid today.”
Analysis
✅ Valid salam contract.
Example 3: Using Ordinary Sale Wording
An Islamic bank says:
“We purchase 200 tonnes of crude palm oil from you for RM800,000 paid immediately, with delivery after 8 months.”
Analysis
Although the word “salam” is not used:
✅ Valid salam contract.
Example 4: Invalid Unclear Arrangement
A buyer says:
“I may pay you later if I agree, and you can supply goods whenever available.”
Analysis
The statement lacks:
❌ Invalid salam contract.
Important Principle
In Islamic commercial law:
contracts are judged by their substance and meaning,
not merely by labels or terminology.
Thus:
Summary Notes
Salam Contract May Use:
✅ Salam
✅ Salaf
✅ Sale
✅ Any wording clearly indicating deferred commodity delivery for upfront payment.
Essential Meaning That Must Exist
The contract must clearly show:
1. Offer and Acceptance in Salam Contract
Explanation
A salam contract may be concluded using:
- the word salam;
- the word salaf;
- the word sale; or
- any wording that clearly indicates:
What is important in Islamic contracts is:
- the meaning and intention of the contracting parties,
not merely: - the exact terminology used.
- advance payment; and
- deferred delivery of specified goods
Key Elements Reflected in the Contract Wording
The wording must indicate:
- immediate payment of the price;
- future delivery of goods;
- clearly specified commodities.
Example 1: Using the Word “Salam”
A trader says:
“I enter into a salam contract to purchase 5,000 kg of rice for RM40,000 to be delivered after 6 months.”
The farmer accepts.
Analysis
- The word salam is expressly used.
- Future delivery and upfront payment clearly stated.
✅ Valid salam contract.
Example 2: Using the Word “Salaf”
A buyer says:
“I make a salaf agreement with you for delivery of 100 tonnes of wheat after harvest in exchange for RM300,000 paid today.”
Analysis
- The term salaf historically refers to salam.
- Immediate payment and deferred delivery specified.
✅ Valid salam contract.
Example 3: Using Ordinary Sale Wording
An Islamic bank says:
“We purchase 200 tonnes of crude palm oil from you for RM800,000 paid immediately, with delivery after 8 months.”
Analysis
Although the word “salam” is not used:
- the contract clearly indicates:
- immediate payment;
- deferred commodity delivery.
✅ Valid salam contract.
Example 4: Invalid Unclear Arrangement
A buyer says:
“I may pay you later if I agree, and you can supply goods whenever available.”
Analysis
The statement lacks:
- certainty of payment;
- certainty of delivery;
- precise contractual obligation.
- uncertainty (gharar);
- ambiguity.
❌ Invalid salam contract.
Important Principle
In Islamic commercial law:
contracts are judged by their substance and meaning,
not merely by labels or terminology.
Thus:
- any wording clearly establishing:
- advance payment;
- future delivery;
- specified commodities
Summary Notes
Salam Contract May Use:
✅ Salam
✅ Salaf
✅ Sale
✅ Any wording clearly indicating deferred commodity delivery for upfront payment.
Essential Meaning That Must Exist
The contract must clearly show:
- full advance payment;
- future delivery;
- specified commodity;
- agreed delivery date.
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