By:

Muhammad Tehsin Malik

 Existence Owner

of Subject Matter

ship of subject matter

Possession
2

of subject matter

Exceptions Salam Istisna

 Salam

is a sale whereby the seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot
permissibility of Salam is an exception to the general rule that prohibits forward sale and therefore it is subject to strict conditions

The

1. Payment of full price at initiation

2. Only for goods whose quality and quantity can be specified 3. Not on a particular product. eg. Supply of wheat of a particular field or the fruit of a particular tree since there is a possibility that the crop is destroyed before delivery and given such possibility, the delivery remains uncertain

4. Clearly defined quality

5. Clearly defined quantity

6. Exact date and place of delivery specified

7. Commodity for Salam contract should remain in the market right from the day of contract up to the date of delivery or at least till the date of delivery

9. The time of delivery should be at least fifteen days or one month from the date of agreement. However, Hanafi sect does not specify any minimum time limit
10. Price in Salam is generally lower than the price in spot sale; the difference in the two prices is a valid profit for the Bank 11. Collateral to be obtained 12. The bank needs special cell for dealing in commodities

 Usually

done to finance small traders and

farmers
Parallel

salam

Cannot be contingent on first salam

Commodity Buy

is sold at the time of delivery

Back by farmer or seller not allowed

Financial Institution can benefit from salam through a parallel salam (non-contingent)

The

institution can obtain a promise to purchase from a third party regarding commodity under salam

 Order

to manufacture a particular good

of Price of product specification

Determination Determination Can

be cancelled before start of manufacturing

Specific

manufactured goods are to be provided at the delivery

ISTISNA

SALAM

The subject can be The subject is always a anything that need thing which needs to be manufacturing or not. manufactured.

The price in Istisna Full Price is needed to does not necessarily be paid in Advance need to be paid in full in advance

ISTISNA

SALAM

The time of delivery The time of delivery is does not have to be an essential part of the fixed sale The contract can be The contract cannot be cancelled unilaterally cancelled unilaterally before the manufacturer starts the work