Market price of Salam on the date of delivery : is it permissible ?

Abstract EN

Al-Salam is a kind of deferred sale, in which advance payment is made for goods to be delivered later on.

There is consensus among the fuqaha on its permissibility if contracting parties agree on the price.

However, some fuqaha have said that ‘the price’ means the one pervailing in a market on the day of cotract, while others have allowed the market price on the date of delivery.

Even some fuqaha think that agreeemnt on the latter price is possible provided a specific amount or a proportion of it is deducted from it.

For example, if you pay 100 Saudi Riyal now and get after a year a commodity whose price in the market exceed by 10 over 100 Saudi Riyal, then this extra amount will be a kind of riba’l-nasiah, because the process is more akin to lending than sale.

The sale contract in this case is free from any risk.

And most probably the buyer will transform the sale of the commodity to exchange to get 110 Saudi Riyal.

Thus, inspite of the fact that increasing price in credit sale is permissible to majority of fuqaha and similarly decreasing the price is also permissible in deferred sale, in which delivery of the commodity is delayed, the sale in the above mentioned case shall be invalid as it will be a subterfuge to earn interest.