Salam
Advance payment for goods delivered later, often in agricultural contexts.
Detailed Description
Salam
What is the primary purpose of a Salam contract?
The primary purpose of a Salam contract is to facilitate advance payment for goods to be delivered at a specified future date, promoting ethical trading.
What are the two main types of Salam contracts?
The two main types of Salam contracts are Salam Al-Mudharabah and Salam Al-Mustajir.
What risks are associated with Salam contracts?
Risks associated with Salam contracts include delivery risk, quality risk, market risk, and regulatory risks.
How does Salam differ from conventional financing?
Salam differs from conventional financing by avoiding interest-based lending and promoting transactions based on tangible goods and mutual agreement.
What benefits does Salam provide to producers?
Salam provides liquidity for producers, mitigates risks, encourages production, and aligns with ethical financing principles.