Advance Payment
Advance Payment (Click Here To Download PDF)
Its Definition
A sale with advance payment (As-Salam or As-Salaf ) is the sale of specified merchandise that is guaranteed (i.e. it will be given later). This is when someone buys a specific thing with a known description, such as food, animals or otherwise, for a fixed term. He pays the price in advance and will wait for the specified delivery time to receive the goods. If the fixed time comes, then the seller will deliver him the prescribed goods.
Its Ruling
The sale with the advance payment is permissible, since it is a type of trade and trading is allowed. It is also allowed due to the statement of the Messenger of Allah (saw):
“Those who pay in advance for anything must do so for a specified measurement, a specified weight and for a specified time.” (Al-Bukhari and Muslim)
Ibn “Abbas, may Allah be pleased with him, said, “When the Messenger of Allah (saw) came to Al-Madinah, they were paying one, two and three years in advance for fruits.” (Bukhari & Muslim)
Its Conditions
Selling with advance payment is valid under the following conditions:
1. The price should be gold, silver, or any currency that stands as a subsititute for them. This will prevent dealings of usuary.
2. The seller should be specific about the description of the merchandise. He should mention its kind, type, and amount. This will prevent any dispute, which will result in hatred and enmity between a Muslim and his brother.
3. The term should be fixed and known, and for a long term, for example, half a month, or more.
4. The price should be paid on the spot so that the deal will not involve selling a debt for a debt, which is strictly prohibited.
The basis of these conditions is the saying of the Prophet (saw).
“Those who pay in advance for anything must do so for a specific item, a specific weight and for a specific time.” (Al-Bukhari and Muslim)
Its Regulations
1) Credit shall be within a period in which price fluctuation is possible. For example, one month, etc. This is because a sale on advance payment for short term has the same ruling as trading, and seeing the merchandise and its verification are both condition of sale.
2) The credit term should be for a period in which the sold merchandise is likely to be readily available. In other words, it is invalid to deliver ripe dates in the spring season or grapes in the winter season, because such a situation will create discord among the Muslims.
3) If the specified delivery point (place) of merchandise has not been mentioned in the contract, then the delivery of it should take place at the same place where the contract is finalized. However, if a particular delivery place is specified in the contract, then implementing such term is incumbent. Wherever both parties agree to deliver the merchandise, this will be the place of delivery, as the Muslims are bound to the fulfilment of their commitments.
Textual Format for the Written Sales Agreement
After mentioning Allah’s Noble Name, the person says:
“Thereafter: Verily so-and -so person has purchased for himself from so-and- so person, while both parties are healthy, of sound mind and sane, and are legally allowed to handle their affairs. He bought from him by his own will the whole building, which is situated in so-and-so city or village, including the land and upper and lower levels of the building. The specification of the building is very clear as witnessed thereon. Both parties involved in the selling and buying, testify that such and such portions are inclusive (described with complete specification).”
The boundaries of the building should be specific. For example, east of it is the house of so-and-so at such and such place, who is known as so-and-so. Similarly west of it, north and south should be specified. All of its utilities and accessories, roads, upper and lower areas, stones and woods, windows and doors, and water drainage systems should be clear. Likewise, all of its interior and exterior benefits should be specified.
“This is a purely legal purchase that is free from any exemption and any conditions that invalidate the deal. This deal is concluded for the price of such and such amount. The above-mentioned buyer has paid the above-mentioned seller the full payments that were agreed upon as mentioned above. Thereupon, he received the above payment as per legal receipt. The seller has delivered the complete building to the buyer with its full amenities as specified above. The buyer has received the said building from the seller in a legal manner, according to the existing legal procedure. Both parties have concluded this deal voluntarily with free will, and thus, they have both endorsed the above agreement.” They both departed after two witnesses who know them witnessed this agreement, and they are so-and-so, and so-and-so.
“This agreement has been concluded on such and such date.”
Textual Format for a Written Sale with Advance Payment
After praising Allah the Almighty: “So-and-so has agreed that he has received and is in possession of such and such amount from so-and-so. This is an advance payment sale for such and such goods,” for example, “wheat (and he mentions the kind). This is according to the measurement of such and such city. This will be delivered after exactly two months from the date of agreement, and carried to the such and such place. In addition, it is agreed that he (the seller) is able to execute this agreement and he has taken the capital money of this legal advanced payment at the time of the contractual agreement (i.e. cash payment), and its price is such and such amount. This agreement has been concluded on such and such date.”