hanan salam presentation

8/13/2019 Hanan Salam Presentation

1/16


2/16

Presented By: Hanan Nasir

Presented To: Soniya Hassan

Department: Business Administration

Session: Spring 2011


3/16


4/16

Salam Salamis a sale whereby the seller

undertakes to supply some specific

goods to the buyer at a future date in

exchange of an advanced price fullypaid at spot.


5/16

Salam

In Salam, purchased goodsare deffered, price is paid onspot.

In Salam price has to be paidin full in advance.

Salam is not executed in theparticular commodity butcommodity is specified by

specifications.

Salam cannot be effected inrespect of things, which mustbe delivered at spot. e.gSalam b/w wheat and barley.

Murabaha

In Murabaha purchasedgoods are delivered at spot,price may be either on spot ordiffered.

In Murabaha price may be onspot or differed.

Murabaha can be executed inparticular commodity.

Murabaha can be executed inthose things.

Difference b/w Salam & Murabaha


6/16

Benefits

Salam is beneficial to the seller,

because he receives the price

in advance, and it is beneficial to the

buyer also, because normally, the pricein salam used to be lower then the price

in spot sales.


7/16


8/16

Conditions(1) First of all, it is necessary for the validity of salam that the buyerpays the price in full to the seller at the time of effecting the sale.

(purpose : fulfill the instant needs of the seller.)

(2) Salam can be affected in those commodities only the quality andquantity of which can be specified exactly.

(purpose : eliminate disputes on quality of product)

(3) Salam cannot be affected on a particular commodity or on aproduct of a particular field or farm.

(purpose : the delivery becomes uncertain)

(4) It is necessary that the quality of the commodity is fully specified.(purpose : leaving no ambiguity)


9/16

(5) It is also necessary that the quantity of the commodityis agreed upon in unequivocal terms.

(purpose : exact measure should be known)

(6) The exact date and place of delivery must bespecified in the contract.

(7) Salam cannot be affected in respect of things which

must be delivered at spot.


10/16

Time

Hanafi and Hanbali schools that the time ofdelivery is, at least, one month from the date ofagreement.

(beneficial to farmers)

Imam Malik supports the view that it should not beless than fifteen days, because the rates of themarket may change within a fortnight.

According to the Hadith , is that the time of deliverymust be clearly defined. The parties may fix anydate for delivery with mutual consent.


11/16

Salam as a Mode of Financing

This mode of financing can be used bythe modern banks and financialinstitutions, especially to finance the

agricultural sector. In order to ensure that the seller shall

deliver the commodity on the agreeddate, they can also ask him to furnish a

security


12/16


13/16

Mr A Mr B

Islamic Bank Islamic Bank

Purchaser Seller

1stSalam Seller 2ndSalam Purchaser

Delivery of

CommodityDelivery ofCommodity


14/16


15/16

If the bank has no expertise to sell the

commodities received under Salam

contract, then the bank can appoint the

customer as its agent to sell the commodityin the market/third party, subject to Salam

agreement and Agency agreement are

separate from each other.


16/16

hanan salam presentation

Documents