Salam with a condition for the case of non-delivery of the goods

Question

A person took fifty rupees for trade from another person on these terms: four months from the day of taking, on a fixed date, he would deliver two maunds (a unit of weight, ≈ 37 kg) of ghee (clarified butter) in exchange for these fifty rupees; and if he could not deliver the ghee, he would pay on the fixed date whatever sum results according to the prevailing “badni” method (a moneylenders’ scheme recalculating a debt by commodity price).

Answer

This transaction is impermissible in the Shariʿa. To say, “In exchange for this money I will give ghee at such-and-such a rate on such-and-such a date,” is valid; but making it a condition that, if the ghee is not delivered, a sum will be paid according to the prevailing badni method vitiates the contract (mufsid), and sale is among those contracts that become fasid (defective)

Source: Fatawa Mahmudiyya

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