Bay-e-Salam

QUESTION:

Please explain if the following manner of conducting business transactions is permissible:

I don’t keep stock on hand. When customers wish to purchase goods, I require either a deposit or payment first, before placing the order. This happens mostly when orders are large and my funds are insufficient, so I use the deposit/payment to pay for the goods and supply. Is this correct?

ANSWER:

You have stated in your query that there are times when you are not in possession of the goods required by your customer, hence, in such instances you take a deposit from the customer. The deposit taken from the customer falls in the category of “Amaanat” and therefore, cannot be used to purchase the goods required by him. The funds will thus have to be put into safekeeping. You are required to purchase the stock with your own funds, and when the goods arrive and are in your possession, only then would you conclude the deal with your customer. You will be required to hand over the “Amaanat” of the customer (the funds) to him, and he will use the funds in turn to pay for his purchase. This is one way of securing a deal with the customer when you are not in possession of the goods. However, in this instance, you will require capital to purchase goods from the supplier.

Now, if you, as the seller, do not have the funds to purchase stock from your supplier (as a huge amount of funds may be required at times to purchase goods), then you may use the option of Bay-e-Salam. In Bay-e-Salam, the seller (referred to as the Muslam Ilaihi) is required to provide a complete description of the product that he will be selling to the buyer (who is referred to as the Rabb-us-Salam), as well as the brand-name or make of the item, and the grade or quality of the items, etc. The seller is also required to mention the quantity of items to be supplied, the time of delivery, the purchase price, and the place of delivery. Thereafter, the purchaser or buyer provides the capital up-front to the seller, which the seller uses to purchase the goods. You may adopt this means of transacting if you do not have the capital to purchase stock.

We hope that the above explanation will suffice in resolving your matter.

 ALLAH TA’ALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST!

ANSWERED BY:

Mufti Mohammed Desai

Date:-  07 Muharram 1445 / 26 July 2023