In the name of God the compassionate the merciful
Bai Asalam is an antiquity form of forward contract where the price was paid in advance at the time of making the contract for prescribed goods to be delivered later. When the prophet (SAW) arrived in Madina, he saw the people of Madina already practising bai Asalam and he streamlined the practice. Salam sale contract is the exact opposite of Bai Mu’ajjal in which goods are delivered to the buyer in advance and the agreed price is paid at a stipulated date in the future. The Islamic scholars of Hijaz call it bai Asalaf, which means payment in advance. whilst Islamic scholars of Baghdad refer to it as bai Asalam. However, in general, these two names are used interchangeably in several Ahadeeth literature to explain this type of contract. The parties stipulate a certain time for the supply of goods of specified quantity and quality. As the commodity to be delivered in future against prompt payment becomes a debt on the part of the seller, the transaction is termed Salaf and implies a loan without any benefit.
The legal evidence for the permissibility of the salam sale contract is confirmed in both the Quran and the Sunnah and ijma (the consensus of Islamic jurists). Quran 2:282 “O you who believe, when you deal with each other in a transaction involving future obligations in a fixed period of time, reduce them to writing, let a scribe write down faithfully as between the parties…”. According to Ibn Abbas, one of the famous and authentic Quranic exegesis scholars among the companions of the Prophet (SAW), this verse was revealed regarding the permissibility of salam transactions during the Madina era.
In addition, ibn Abass also confirmed this through a hadeeth of the prophet (SAW) “Salam Sale Contract has been permitted by the Prophet (SAW) himself, without any difference of opinion among the early or the contemporary jurists, despite the general principle of the Sharıah that the sale of a commodity which is not in the possession of the seller is not permitted. Upon migration from Makkah, the Prophet (SAW) came to Madinah, where the people used to pay in advance the price of dates and other fruits to be delivered within one, two and three years. But such a sale was carried out without specifying the quality, measure or weight of the commodity or the time of delivery. The Prophet (SAW) then ordained: “Whoever pays money in advance for fruit to be delivered later should pay it for a known quality, specified measure and weight, along with the price and time of delivery.”
This clearly shows that the Salam contract is an exception to the general Shariah rule that “one cannot sell what one does not possess at the time of payment
Some rationale and benefits of bai Asalam
Several benefits are derived from bai Asalam. Basically, this contract is permitted to meet the needs of small farmers who needed money to grow their crops and feed their families up to the time of harvest. So, the seller benefits by getting cash in advance, and the buyer also benefits from cheap prices, because usually, the Salam price is cheaper than the cash market price. This way he will also be secured against fluctuations of prices.
In addition, the predominance of bai Asalam practice in Madina at the time, clearly indicates that the price received in advance might have met both the production and consumption requirements of the cultivators. Also, from the point of view of the farmers, bai Asalam might be a preferable way of taking financing as compared to a loan with interest, because first, it did not make an increase in cost as interest did and, second, it saved them from the hardships and the risk involved in marketing their produce. And Allah knows best!
We pray that Allah offers us an Islamic finance House in Ghana not because of our work but because of His mercies. Ameen.
YAHAYA ILIASU MUSTAPHA
The writer is an Islamic Banking and Finance patron and advocate in Ghana.
Email: yahaya0246873726@gmail.com
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