Salam Contract In Buying And Selling Transactions, These Are The Pillars & Conditions!

BANK & FINANCE, ACTIVELYSHARE.COM — This is an in-depth discussion of the salam contract from its meaning to its types.

Are you familiar with the term Akad Salam or Salam contract? The definition of a salam contract is a term in Islamic sharia finance and refers to a sale and purchase transaction in which the goods being traded are not at the place of the transaction, but by paying in advance, the buyer will receive the goods some time later.

To find out more about the salam contract, including the difference between it and the istishna contract, let’s look at the following article!

The difference between the Salam contract and the Istishna contract

What is a salam contract and how is it different from an istishna contract? Quoting the definition of Wahbah al-Zuhaili in Al Mu’amalat al-Maliyah al-Mu’ashirah, salam contract is a term for buying and selling goods, even though the goods have not been received by the buyer, the goods provider has agreed to give it.

The difference between a salam and an istishna contract is that an istishna contract is a sale and purchase contract which in the process requires the manufacture of goods in advance to fulfill the buyer’s order. While the salam contract is a transaction term that does not require the production process of the goods before they are delivered.

Example of Salam Agreement

An example of a salam contract is the following scenario. You as a buyer ordered 150 wallet souvenirs to be sent in 3 days. This fulfills the definition of a salam contract, which is a sale and purchase contract which, even though the sale and purchase transaction has not yet appeared in its form, but as a buyer you will get it at a later date. In this case, you get it in 3 days.

For example, bags are not included in the definition of an istishna contract because the goods being traded do not require the process of making goods.

In addition, an example of a salam contract in Islamic banking is when a customer requires bank assistance to obtain industrial, agricultural and household products. In the following cases, the bank acts as a buyer for the goods required by the customer.

Legal Basis Used for Salam Contract

The legal basis for the salam contract is the fatwa of the MUI National Sharia Council (DSN) No: 05/DSN-MUI/IV/2000 regarding the Sale and Purchase of Salam. The fatwa explains, among other things, provisions regarding goods, payment, delivery of goods, in the event of a dispute and contract cancellation.

Types of Salam Contract (Akad Salam)

There are two types of salam contracts, namely salam contracts and parallel salam contracts. The following is a schematic of each type.

Salam Contract (Akad Salam)

The first type of syariah salam contract is explained through the salam contract scheme below:

  1. Both parties in the sale and purchase contract reach an agreement
  2. Buyer makes payment to seller
  3. The seller delivers the goods to the buyer as long as they meet the requirements, namely the goods and delivery time as agreed at the beginning

Salam Contract Parallel

The second type of sharia salam contract is parallel. What is a parallel of salam contract? Parallel of salam contract refers to a transaction with three parties, the first is the seller, the second is the buyer and the third is the seller with the supplier of goods or others. The parallel salam contract scheme is as follows:

  1. Account holder and bank reach agreement on goods order through negotiation
  2. The bank will order the goods from the seller and pay in advance
  3. Seller sends attachment to bank
  4. The seller sends the goods to the account holder or buyer
  5. Account holder or buyer pays bank

The difference between a parallel salam contract and a salam contract lies in the presence of a third party in the transaction.

Salam Contract Pillars

There are four pillars of the covenant of peace, namely as follows.

1. Parties involved

The first pillar of the salam contract is the existence of two parties involved in a transaction, namely:

  • Muslim (the party who ordered the goods or called the buyer)
  • Muslim (the party who delivers the goods or the seller.

To fulfill the above contract, both parties are required to fulfill the requirements of the ba’i contract or sale and purchase. The requirements include being mature, reasonable and endeavoring in the sense that they will try to fulfill their responsibilities in the transaction and are not forced to or are in unfavorable financial condition.

2. Acceptance

The next pillar of the salam contract is the consent or shighat. To fulfill this pillar of consent, both parties must be in the same contract assembly and match the consent and qabul.

3. Down payment

The third pillar of the salam contract is the down payment or ra’sul maal . What this means is that the money submitted according to the agreement must have a clear amount such as 10,000 rupiah, or if it is not in the form of money, the size must be clear. For example, if you pay with rice it becomes 500gr of rice.

4. Muslam fih

Finally, the pillars of the salam contract are the existence of ordered goods or muslam fiih commodities . What are the pillars of Islam fiih? This pillar means clarity about the goods to be exchanged in the sale and purchase contract. The characteristics that need to be emphasized, for example, are size, quantity, model and color. The goal is to prevent potential exchange of goods and minimize conflict.

Terms of the Salam Contract / Agreement

In order for each sale and purchase agreement to be beneficial for both the seller and the buyer, some conditions need to be deferred. Quoting from Saprida (2016: 125), the conditions of the salutation contract are as follows:

  • Make payments at the time of the sale and purchase agreement
  • The seller has a debt in the form of goods that has been paid by the buyer
  • The goods will be delivered within the deadline according to the agreement
  • Clear description of the goods (size, quantity, shape) to avoid misunderstandings
  • State the address where the goods will be received

The practice of modern society as an example of a salam contract is online shopping, where the buyer pays before receiving the product. In addition, the product is also given clarity about its form. Then, the product will be shipped within a few days. Well, now you understand more about the term in Islam, right? Hopefully useful, yes!

To find out more about other terms in Islamic and conventional finance and interesting knowledge about the economy, keep an eye on the blog, friends!

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