The general rule is that the sale of a thing not owned by the seller is void. However, the Holy Prophet
(P.B.U.H.) has allowed Bai'Salam subject to certain conditions. Usually this type of sale was conducted
by farmers who needed money for growing crops. The Shariah has allowed them to sell the agricultural
products on advance payments. However, the validity of this transaction was subjected tot he following
The payment of the purchase price should be in cash at the time of contacting the sale of salam.
Thus, the sale of salam cannot be effected on deferred price or on the basis of part payment.
The subject of sale must be determined with all its specifications for example
quality, quantity etc.
The sale of salam can be effected only in respect of those things which can
be determined by specification. Things which differ in quality from piece to
piece cannot be sold on salam basis.
The time and place of delivery must be agreed upon at the time of sale.
The commodity sold must be available in the market place throughout the
period of salam.
According to Hanafi jurists, the period of delivery should not be less than one
month. However this condition is not necessary according to other jurists.
The buyer cannot sell the commodity to another person unless he takes
delivery from the seller.
Bearing in mind these conditions with all the relevant details elaborated upon in
Islamic jurisprudence, it seems to be difficult to use Bai'Salam as a mode of finance
except by agricultural banks. However, if all the necessary conditions are fully
observed Bai'Salam may be used by other financial institutions also.