• This Practice Note provides a high-level introduction to product Salam as used in Islamic finance.

Bay' al Salam (also simply referred to as “Salam”) is, similar to Istisna' (see PN:” Structure of a Istisna' Transaction”-Kuwait), a future sale contract whereby the seller undertakes to sell to the buyer a tangible asset or group of assets which may not be in existence at the time the transaction is entered into. Therefore, while normally under Islamic finance a sale transaction cannot be entered into unless the underlying assets exists, Salam introduces an exception to this rule - as long as the goods can be defined and a fixed date of their delivery is determinable, the parties can enter into a Salam transaction.