We are a sourcing company, we get inquiry for a certain product from our customers; We source the product from factories and distributors in china; We quote our customer with our margins; Customer if approve send us payment sometime partial and sometimes full in advance as our agreed terms We then place order to our supplier/factory and then take delivery of goods and forward to our customers in agreed manner and terms and conditions.
we cannot keep all stock with us because of a very huge variety of orders that we get but i was thinking sometimes that if this method of trading halal ? i have this doubt because we are dealing for something which we do not have in our hand . and will be purchased once we get the orders.
also our customers are aware that we are not manufacturers/resellers we just source it for them with our margins.
Muhtaram / Muhtaramah
In the Name of Allāh, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāh wa-barakātuh.
The transaction mentioned in the query could be regarded as Salam.
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 on spot.
The permissibility of salam was an exception to the general rule that prohibits forward sales, and therefore was subjected to some strict conditions. These conditions are summarised below:
1.Full payment of the price should be made at the time of affecting the sale. Failing to do so will tantamount to sale of debt against debt, this is expressly prohibited by Nabi (Sallallahu Alaihi Wasallam).
2.Salam can only be affected in those commodities whose quality and quantity can be specified exactly.
3.Salam cannot be affected on a particular commodity or on a product of a particular field or farm. For example, if the seller undertakes to supply the wheat of a particular field, or the fruit of a particular tree, the salam will not be valid. The same rule is applicable to every commodity the supply of which is not certain.
4.It is necessary that the quality of the commodity is fully specified leaving no ambiguity which may lead to a dispute. All the possible details in this respect must be expressly mentioned.
5.It is also necessary that the quantity of the commodity is agreed upon in unequivocal terms. If the commodity is quantified in weights according to the usage of its traders, its weight must be determined, and if it is quantified through measures, its exact measure should be known. What is normally weighed cannot be quantified in measures and vice versa.
6.The exact date and place of delivery must be specified in the contract.
7.Salam cannot be affected in respect of things which must be delivered at spot. For example, if gold is purchased in exchange for silver, it is necessary, according to Shari’ah, that the delivery of both be simultaneous.
8.It is necessary that the commodity remains available in the market right from the day of contract up to the date of delivery. Therefore, if a commodity is not available in the market at the time of the contract, salam cannot be effected in respect of that commodity, even though it is expected that it will be available in the markets at the date of delivery.
It is understood from the above mentioned that the transaction mentioned in the query will not be permissible when the advance is paid partially.
However, when the advance is paid in full and the conditions mentioned above are met, then the transaction will be permissible.
And Allah knows best
Darul Iftaa, Madrassah In’aamiyyah