Glossary

Salam

سلم

Definition

A forward sale where the buyer pays in full upfront for a specified commodity to be delivered at a future date.

Salam is a classical exception to the general rule against selling what you do not yet possess. It was permitted to help farmers and craftspeople finance production. Strict conditions apply: full prepayment, precisely specified goods, and a defined delivery date.

Modern Islamic finance uses parallel salam structures in commodity financing, but the contract is not used for retail forex or stock trading.