(Prepaid Transaction) 'Salaf'

If a commodity by a general definition to be delivered after a certain time is purchased to be paid for soon after the formation of the contract, contrary to paying for an already delivered merchandise after a certain time, such transaction is called 'Salaf'. For each of the four elements involved there is a certain Arabic word: Buyer called Muslim.

Seller called Muslam Elayh, Commodity called Muslam-fih and Price called Muslam.

CR (246) In a prepaid deal it is lawful for the goods and the money to be other than gold and silver, regardless, they are of the same kind or different or that one side is exchanged by weight or measurement. It also is lawful for the one side to be gold or silver and the other side not gold and silver, irrespective of the side of deal and it is not lawful for both sides of the deal to be gold or silver whether both sides are of the same kind or different.

In prepaid transaction the following conditions must exist:

(a) The goods to be delivered after the agreed time must be such that its qualities could be thoroughly described: the qualities that because of their absence or presence its (goods) prices change, qualities like good, bad, smell, taste and color, etc., like vegetables, grains, foods, clothing, medicines, professional tools, arms, works, animals, etc. The prepaid contract of commodity, which cannot be fully described, and without close observation the possibility of loss and lack of knowledge cannot be removed, the deal is not valid.

(b) Description of kind and qualities that fully identify the goods.

(c) Taking possession of the price before departing the buyer. Taking possession of some of the price only validates the deal for that portion, for which payment is received, and the rest of the deal is void, however, the seller has the right to revoke the contract for that portion. Also if the seller owes an amount of money to buyer such loan can also be turned into the payment for a prepaid form of deal.

(d) The quantity of the commodity should exactly be determined either by weight, measurement or number.

(e) The exact time of the delivery must be determined either by days, months or years, and it must not be such a time when the goods are scarce and it would not be possible to deliver etc.,

(f) It must be possible for the seller to deliver what he has promised on time and at place of delivery, if place also is a condition, regardless, the commodity is rare or in abundance. If for some reason even for his inability like being in prison, etc., he cannot deliver, the deal is void.

CR (247) Unrestricted nature of contract requires the delivery for a prepaid deal to be made at the place where the contract is formed, unless there are some indications otherwise, either making any place good for delivery or a particular one. According to a strong reason it is not necessary to determine the place of delivery in the contract unless delivery to a certain place is more difficult and more expensive which in turn amounts to loss and deceit to one party in which case it is necessary to determine the place also.

CR (248) When the time is said to be one lunar month or two if the deal is formed at the beginning of the month it means the whole month, if the deal is made in the middle it means the rest of the month in addition to some days of the next month equal to the amount of time of the last month past before the deal.

CR (249) If in a contract of prepaid deal the time of delivery is agreed to be either one or two months like A or B it will be interpreted to have started at the beginning of the month which comes first in the order of the months in a year, and if it is agreed about the delivery time to be Thursday or Friday it will be the first month and day of the year and the first part of such day will mark the due time for delivery.

CR (250) It is not permissible to sell it to other than seller before the time set for delivery, but it is lawful after the time set for delivery, regardless, it is in exchange for the same kind of goods originally paid as price or different with some extra amount or less or none. This is about the case where the commodity is not of the kind exchanged by weight or measurement, otherwise, it is not lawful to sell before taking possession in a 'Murabaha' deal (see CR 195), however, in the case of grains selling or buying before delivery is Makruh, undesirable.

CR (251) If the seller delivers the commodity according to a prepaid deal and it does not fit the description which it was supposed to have it is not necessary for the buyer to accept it, but if he accepts it, the deal will be valid, also if what is delivered is less than the agreed quantity of the commodity bought through prepaid deal the seller may be freed of his obligation by the buyer if he may do so. If goods of prepaid deal is delivered with all the described qualities and quantities the buyer must accept it. The same CR applies if the commodity has the required qualities and more and it would still be considered the same goods and it would not oblige the buyer for any thing. If the condition for the commodity in the contract would indicate that there must not be anything less than the required qualities, it is necessary for the buyer to accept the goods but if the condition in the contract says that there must be nothing less or more than the required qualities, it is not necessary for the buyer to accept the delivery. If the commodity is delivered with more than the required qualities, it is not necessary for the buyer to accept the delivery. If the commodity is delivered in more than the agreed quantity still it is not necessary for the buyer to accept it.

CR (252) When the delivery time of a prepaid deal is due and the seller is not able to deliver, the buyer has the right, either to annul the contract and demand for refund of what he has paid without anything less or more or wait until the seller is able to deliver. If the seller can only deliver some of the commodity, the buyer has the choice to annul the contract for the remaining or wait to secure them later, but annulling of the contract for the whole at this point is not free of objection, although because of a more clear reason annulling, is lawful. If, the contract is annulled for some part, the seller has the right to annul the whole contract.