Islamic Commercial Matters FAQ #
In Islamic finance, the sale of items that do not yet exist or are not currently in one’s possession is generally prohibited. However, to meet the needs of businesses and consumers for pre-order goods, Shariah law permits the use of al-Salam or al-Salaf contracts (advance payment sales) under specific conditions. These contracts are designed to avoid the issues of riba (usury) and gharar (excessive uncertainty or ambiguity).
Key Conditions for Al-Salam/Al-Salaf Contracts:
- Non-Ribawi Items: The goods involved must not be ribawi (items subject to riba in transactions).
- Defined Quality and Specifications: The quality and specifications of the goods must be clearly defined to avoid ambiguity.
- Clear Delivery Terms: The mode and date of delivery must be explicitly agreed upon by both contracting parties.
This practice aligns with the Prophet’s (ﷺ) guidance:
“Whoever pays in advance the price of a thing to be delivered later should pay it for a specified measure at a specified weight for a specified period.”
(Sahih al-Bukhari, 2240)
