Islamic Modes of Finance: Salam Alias Deferred Delivery Contracts

What is Salam? Bai‘Salam or deferred delivery sale is a forward contract wherein the price was paid in advance at the time of making the contract for the prescribed goods to be delivered at a later date. Unlike Murabaha (Cost plus Financing) and Ijarah (Lease), Salam was originally used as a financing mechanism for small…

Musharaka

Definition and classification of Musharakah  The literary meaning of Musharakah is "sharing". The root of the term "Musharakah" in Arabic comes from the word “Shirkah”, which means 'being a partner'. Under Islamic jurisprudence, Musharakah means; "a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio…