Jurisdiction(s):
United Kingdom

Key definition

Salam definition

What does Salam mean? An Islamic finance forward sale in which the buyer prepays the full price at contract execution for delivery of specified goods at a future date. In UK and Irish legal practice this is a descriptive Sharia term (also called bai‘ al-salam), not defined in domestic legislation or case law. Transactions are documented under English, Scots, Northern Irish or Irish law and enforced as ordinary contracts for the sale of goods. Key features include: full advance payment; a fixed delivery date (and usually place); and goods precisely described by type, quality, quantity and standards. It is typically used to provide working capital...

Bai Salam (Shari'ah-compliant forward sale): structure, required elements, parallel contracts, excluded assets, delivery and security, variation/termination, and distinctions from istisna'a, futures and short-selling

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Practice notes

Terminology

In bai salam arrangements, the purchaser is known as the rabb-us-salam, the vendor as the muslam ilaih, the agreed price as the ra’s-ul-mal, and the underlying item as the muslam fih. Owing to the historic foundations of Shari'ah principles—and the jurisprudence informing bai salam—the language largely centres on commodities, particularly within agriculture. As contemporary Shari'ah structures have broadened to suit a wider range of situations, this Practice Note will therefore use ‘assets’ rather than ‘commodities’. It should be noted that not every asset is suitable for a bai salam arrangement (see the section on ‘Excluded assets’ below). The roots of bai salam reach back to the earliest Islamic era, created to assist farmers and agricultural labourers who needed funds to cultivate crops and deliver the harvest. Bai salam is also commonly termed bay salam, bai al-salam, bay al-salam, or simply salam. Impact of differing Shari'ah schools of thought and scholars: a number of Shari'ah-compliant transactions, particularly those that have been in operation for a significant amount of...

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Web page updated on 21/05/2026

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