Salam & Istisnāʿ
Understanding Islamic Contracts • Module 3 of 4
Salam & Istisnāʿ (Forward Sales)
Salam is an advance payment for specific goods to be delivered in the future, common in agriculture. Istisnāʿ is a contract to manufacture or construct a specific asset, with payment made as agreed (upfront, in stages, or on completion). Both are crucial for funding production and projects.
Example: Salam: Paying a farm upfront for a future harvest. Istisnāʿ: Paying a contractor in stages to build a house.
Key Difference
Salam is for generic goods (like commodities) and the price must be paid in full upfront. Istisnāʿ is for custom-manufactured goods and the payment can be flexible.