---
title: "What is Salam? | IslamicOpenFinance™"
description: "A forward sale: the full price is paid at signing for precisely specified goods to be delivered later."
url: https://islamicopenfinance.com/glossary/salam/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Sale-based contracts](https://islamicopenfinance.com/glossary/#sales)

Sale-based contracts

# Salam

A forward sale: the full price is paid at signing for precisely specified goods to be delivered later.

Salam is the sale of a commodity of known type, quantity and attributes, for a known price paid in full when the contract is signed, with delivery in the future in one or several batches. The IFSB uses this definition in its capital adequacy standard. Because the price is paid up front, salam is used to finance producers such as farmers, and banks often offset their position with a separate parallel salam in which they sell similar goods onward.

## Sources

- [IFSB-23 Revised Capital Adequacy Standard (Banking Segment), 2021: Definitions, Salam](https://www.ifsb.org/wp-content/uploads/2023/10/IFSB-23_En.pdf)

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

## Related terms

[**Istisna** A contract to manufacture or build a specified asset for delivery on a set date, with the price paid in stages or as a lump sum.](https://islamicopenfinance.com/glossary/istisna/) [**Gharar** Excessive uncertainty in a contract, about the object, price, quantity or delivery, which can make the contract invalid.](https://islamicopenfinance.com/glossary/gharar/) [**Bay al-muajjal (deferred-payment sale)** A sale in which the goods are delivered now and the price is paid later, in one sum or in instalments.](https://islamicopenfinance.com/glossary/bay-muajjal/)

**Sale-based contracts**

1. [Murabaha](https://islamicopenfinance.com/glossary/murabaha/)
2. [Musawamah](https://islamicopenfinance.com/glossary/musawamah/)
3. [Bay al-muajjal (deferred-payment sale)](https://islamicopenfinance.com/glossary/bay-muajjal/)
4. [Istisna](https://islamicopenfinance.com/glossary/istisna/)
5. [Tawarruq](https://islamicopenfinance.com/glossary/tawarruq/)
6. [Bay al-sarf (currency exchange)](https://islamicopenfinance.com/glossary/bay-al-sarf/)
7. [Murabaha to the purchase orderer](https://islamicopenfinance.com/glossary/murabaha-purchase-orderer/)
8. [Hamish jiddiyyah (security deposit)](https://islamicopenfinance.com/glossary/hamish-jiddiyyah/)

[All 221 terms](https://islamicopenfinance.com/glossary/)