Bai-salam

Bai-salam

Bai-salam defined as a contract or agreement with a buyer and seller in which the seller is sold in advance the certain commodity (ies)/ products(s) permissible under Shairah and law of land to the buyer as per terms and conditions of agreement. And the merchandise/ commodity (ies)/ products(s) is/are delivered as per specification, size, quality at a future time in a specific place.
We can say in other words, Bai-salam is an advance buying and selling procedure which is allowed by the shariah principle. In this mode, commodity (ies)/ products(s)/ goods are supplied after a specific time (in future) but the payment/exchange is made ob spot (i.e. at present).

In a nutshell, Bai-Salam is that type of procedure where the price is paid in cash, but the delivery of goods is deferred.

Feature of  Bai- Salam 

Important features of  Bai- Salam are given bellow:

1)      In this mode, the seller can sold the goods without having the physical possession.

2)    If the goods are ready for sales, Bai-salam mode is not allowed by the Islamic Shariah Principle.

3)    Generally, this mode is used to meet up the urgent need of the shortage of fund/cash of Industrial and Agricultural products.

4)    It is permissible to obtain collateral security to minimize the risk of investment.

5)    It is also permissible to obtain mortgage or personal guarantee from the third party  as security at the time of signing agreement or before the signing of the agreement.

6)    The seller (manufacturer)/ client may be made agent of the to sell the goods delivered to the bank by him provided a separate agency agreement is executed between the bank and the client (Agent ).

7)    This mode is used for only agricultural product.

8)    Detailed specification of the goods must clearly mentioned in the contract to avoid ambiguity.

9)    The exact time and place of delivery must be specific.

10)   Mode of transportation, transport costs, storage charge/ godown rent, insurance etc if any (who will bear) must specified in the contract.

11)  All risk and responsibility on the seller or client, if any loss arises, the seller must payback the value of commodities/products.

12)  It is not necessary to mention cost of commodities/products and profit separately in the contracts; only purchase price may be mentioned.

13)  The seller shall responsible for maintaining quantity, quality, and specification of the commodities/ products until making physical/constructive delivery of the same to the buyer.

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