Bay al-Salam
Full name for Salam contract, where payment precedes delivery of goods.
Detailed Description
Bay al-Salam
What is the main purpose of Bay al-Salam?
The main purpose of Bay al-Salam is to facilitate trade by allowing buyers to pay in advance for goods to be delivered at a future date, while adhering to Islamic law.
How does Bay al-Salam differ from conventional contracts?
Bay al-Salam differs from conventional contracts by emphasizing ethical trading practices, avoiding speculation and interest, and locking in prices to protect buyers.
What are the key features of a Bay al-Salam contract?
Key features include advance payment, future delivery, specification of goods, and compliance with Islamic law.
What risks are associated with Bay al-Salam transactions?
Risks include delivery risk, quality risk, market risk, and liquidity risk.
How does Bay al-Salam support farmers?
Bay al-Salam supports farmers by providing them with necessary capital upfront before the harvest season, enabling them to cultivate their crops.