What are the differences between Salam and istisna contract?

The motivation for bay’ al-salam is the seller’s need for immediate funds to spend for his family sustenance as well as to help him with his production. On the other hand, istisna’ is a commercial contract that results in profits for the manufacturer, while meeting the needs of the commissioner to manufacture.

What are the differences between istisna and Ijarah?

Ijarah is a contract that has a service or usufruct as underlying, and the lessor is neither required nor obliged to provide materials. In istisna’a, the manufacturer or builder provides both services and skills in addition to materials in the form of finished items or buildings.

What is Sukuk istisna?

Also known as istisna’a sukuk. A form of sukuk derived from the istisna’a lease financing structure. Once the asset is constructed, the SPV enters into an agreement with the originator to lease the asset to the originator. The SPV uses the rental payments to make payments to the sukuk holders.

What is contract of Salam?

Refers to the purchase of a commodity for deferred delivery in exchange for immediate payment. Thus, in a Salam contract, the price is paid in full and in advance while the commodity is deferred to an agreed date in the future. This type of contract might be used where the commodity price is subject to change.

What was the basic purpose of Salam?

One of the central conditions in Salam contract is related to price payment (ra’su l-mÉl). The price has to be paid before the separation of the two contracting parties. This is because the specific purpose of Salam is to fulfil the instant need of the seller (muslam ilayhi).

What are the differences between contract of sale and contract of Ijarah?

The only difference between Ijarah and sale is that in the latter case the corpus of the property is transferred to the purchaser, while in the case of Ijarah, the corpus of the property remains in the ownership of the transferor, but only its usufruct i.e. the right to use it, is transferred to the lessee.

What is Salam in Islamic finance?

Salam is a sale whereby the seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot in cash, but the supply of the purchased goods is deferred.

What is Bai istisna in Islamic banking?

Istisna’a is an exceptional mode of investment allowed by Islamic Shariah in which product(s) can be sold without having the same in existence. Then the sale may be done either in Bai-Murabaha or Bai-Muajjal mode of investment. In this mode, deliveries of goods are deferred and payment of price may also be deferred.

Who is originator in sukuk?

The originator—a business firm requiring capital—creates a special purpose vehicle (SPV), an independent entity and structures. The SPV protects the sukuk assets from creditors if the originator has financial troubles.

What is istisna Urdu?

The Urdu Word استثنا Meaning in English is Exception. The other similar words are Aitraaz, Girift and Istasna. The synonyms of Exception include are Barring, Excepting, Exclusion, Excusing, Expulsion, Omission, Rejection, Repudiation, Reservation, Passing Over, Debarment and Noninclusion.

What is the difference between istisna and Salam?

The time of delivery does not have to be necessarily fixed in Istisna’ whereas in case of Salam the time of delivery is an essential part of the sale. 4. Istisna contract can be cancelled before the manufacturer starts the work. Salam contract cannot be cancelled unilaterally.

Are there any exceptions to the principle of Salam?

There are only two exceptions to this general principle in Shariah. One is Salam and the other is Istisna. Both are sales of a special nature, and by the present article I want to explain the concept of these two kinds of sale and the extent to which they can be used for the purpose of financing. Meaning of Salam.

Which is the second kind of sale, istisna?

Istisna’ is the second kind of sale where a commodity is transacted before it comes into existence. It means to order a manufacturer to manufacture a specific commodity for the purchaser. If the manufacturer undertakes to manufacture the goods for him with material from the manufacturer, the transaction of istisna’ comes into existence.

What’s the difference between a Salam and a contract?

Salam is a sale whereby the seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot. The contract of Salam creates a moral obligation on the Salam seller to deliver the goods. The Salam contract cannot be cancelled once signed.