The bay al-salam is an exceptional type of sale. Therefore, there are some specific conditions for salam contract which should be completely met apart from the general requirements. In the following, we summarize these specific and essential conditions for salam contract.

Conditions related to the subject matter

1.  The salam contract can be affected on the goods which can be clearly defined in terms of quality and quantity. Therefore, the contract of salam cannot be used for those commodities whose quality and quantity isn’t determined in specification.

2.  The only fungible items (also known as “mithli” in fiqh literature) which do not differ from each other significantly, can be sold through salam contract.

3.  The subject matter of salam must be something which is easily available in the market. This condition is imposed to minimize the risk of non-delivery. Because, sometimes the seller is not be able to deliver the specified amount of commodity due to bad harvest. In this case, he can buy it from the market.

The aim of all these conditions is to avoid from possible dispute among the contracting parties. Because, the commodity isn’t sold on the spot, but will be delivered in the future. Therefore, some strict conditions are imposed in order to remove any ambiguity and possibility of dispute in later.

Conditions related to the price

1. The buyer must pay the price fully to the seller at the time of concluding the contract. It’s not allowed for buyer to defer the whole price or part of it in salam contract. Because, the subject matter of salam contract is already deferred and a debt (obligation) on seller. If the price is also delayed, then it becomes the sale of a debt for a debt which is not allowed in Shariah.

2.  If the price belongs to a ribawi item, then it should not be exchanged for another ribawi item in salam contract.  Because, it would lead to riba as we discussed it in the types of riba.

Conditions related to delivery of the subject matter

1.  The exact date and place of delivery must be clearly specified in the salam contract.

2.   It’s the responsibility of the seller to deliver the commodity on specified date.

3.  If the commodity is delivered according to the specifications, then the purchaser has to accept it. But if it’s lower than the contractual specifications, then the purchaser has the option to either reject or accept that commodity.

These are some essential and specific conditions of bay al-salam. In the next article, we shall explain how the concept of salam is applied in modern Islamic financial institutions.