Is it permissible for me to work in trading where I have no choice but to make a deal and take payment beforehand, before delivering the goods? Or is that regarded as an ambiguous transaction (bay‘ al-gharar)? For example, my work is dealing in expensive perfumes. I ask for payment in full before delivering the perfumes, as I use the money to cover the costs of buying the products from abroad and shipping. I would like to point out that, as a dealer, I have limited resources and cannot pay from my own pocket, and there will be no problem with my customers if I fail to deliver the perfumes, because then I would return to them the money I took.

Praise
be to Allah

This way of
dealing is something that many importers resort to nowadays; they take the
payment for the requested product in full before they buy it and import it,
then they deliver it to the customer. The permissibility of this kind of
transaction is proven by the Sunnah and scholarly consensus. It is called
bay‘ as-salam [salam transaction; payment in advance].

It was narrated
that Ibn ‘Abbaas (may Allah be pleased with him) said:  When the Prophet
(blessings and peace of Allah be upon him) came to Madinah, they used to pay
two or three years in advance for dates. He said: “Whoever pays for anything
in advance, let him pay in advance for a specified measure and a specified
weight, to be delivered at a specified time.” Narrated by al-Bukhaari (2240)
and Muslim (1604).

Salam
transactions are subject to conditions, which must be adhered to in order
for the transaction to be permissible and valid, including the following:

1.    

The price must
be paid in advance in full, and no part of it should be delayed, because if
the price or part of it is delayed, then the transaction will be akin to
selling debt for debt, which the scholars have stated is prohibited.

2.    

The product must
be described in detail, by mentioning its name, type, colour, country of
manufacture, size of packaging, amount in each package and other important
features that affect the price, so that there will be no dispute between the
seller and the buyer later on, when the product is delivered. As for
unimportant details that do not concern the purchaser or affect the price,
they do not need to be mentioned and there does not have to be agreement on
them.

3.    

The date and
time of delivery should be stipulated so that both parties will be committed
to it and there will be no room for dispute between them.

The evidence for
these conditions is the hadith of Ibn ‘Abbaas quoted above: “Whoever pays
for anything in advance, let him pay in advance for a specified measure and
a specified weight, to be delivered at a specified time.”

It says in a
statement of the Islamic Fiqh Council (no. 107):

An import
contract is a contract in which one party promises to deliver a specific
product, to be delivered at a later date, on a regular basis, during a
specific period, to another party in return for a specific amount of money,
all or part of which is to be paid at a later date.

If the contract
deals with a product that is yet to be manufactured, then this comes under
the heading of ‘aqd istisnaa‘ (contract to have something made or done) and
is subject to the rulings on such contracts. The issue of having something
made or done is mentioned in the Council’s statement no. 65 (3/7). We have
mentioned this statement in the answer to question no.
2146.

If the import
contract concerns a product that does not need to be manufactured and it is
described in the contract as something that one party is committed to
delivering, then he must deliver it at the specified time, which may be
achieved in one of two ways:

(a) 

The importer may
take payment in full at the time of drawing up the contract. This comes
under the rulings on salam transactions, and it is permissible if the
conditions that are valid according to sharee‘ah are met, based on the
Council’s statement no. 85 (9/2).

(b)

If the importer
does not take payment in full at the time of drawing up the contract, then
this is not permissible, because it is based on a mutually binding promise
between the two parties. The Council’s statements no. 40 and 41 state that
the mutually binding promise is akin to selling a debt for a debt, which is
prohibited.

But if the
mutual promise was not binding upon either or both sides, then it is
permissible, provided that the transaction is done on the basis of a new
deal at the time of delivery. And Allah knows best. End quote.

Thirdly:

If the deal
fulfilled these conditions, then it is binding on both parties and it is not
permissible for either of them to cancel it except with the consent of the
other; it is binding upon you to deliver the product in question to the
purchaser and if it is destroyed en route then you are liable and should
deliver something like it at the time agreed.

And Allah knows
best.