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Sale Prior to Taking Possession, Sale of Debt and Futures Contract

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Chapter Summary

One of the objections to the futures contract is that it involves sale prior to taking possession. The majority of scholars of the different schools of Islamic law held that sale prior to taking possession is illegal. To foresee the possibility of using parallel salam to build an Islamic futures market, this chapter examines two proposals. The first proposal is suggested by Fahīm Khān. To elaborate on his plan of a futures market based on salam, he proposed that a clearing house may facilitate the chain of transactions. Another proposal for a salam-based futures contract was put forward by Frank E. Vogel and Samual L. Hayes. From the elaboration presented in the chapter, it is clear that although some scholars have cited ribā as one of the causes for the prohibition of the sale of debt for debt, it seems that gharar is the major cause.

Keywords: Fahīm Khān; Frank E. Vogel; Islamic futures market; possession; salam contract; sale of debt; Samual L. Hayes



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