- Like istisna, Salam is another sale structure where certain commodity is transacted before coming into existence.
- In Salam, seller undertakes to supply certain commodity in future in exchange of payment of purchase price to be paid in full on upfront basis.
- This is the reason that Salam is termed in sharia as the sale contract for insolvent sellers who then utilizes the upfront proceeds to acquire the goods or to grow the produce.
- Slam is mainly used to promote agricultural produce or livestock or any other fungible goods
- Purchase price under Salam should be fixed at lower than market price at the time of entering into the transaction.
- This is to allow the purchaser to benefit from difference between the two prices as a reward for helping out the seller as well as for waiting to receive the commodity.
- Salam can only be undertaken for commodity, the quantity of which can be clearly specified.