FIQH MUAMALAT 
📖 Chapter ▼
Chapter 5: Concept Of Contract Chapter 6: Sale-Based Transactions 1 Chapter 7: Sale-based Transactions 2 Chapter 8: Mudarabah Chapter 9: Musharakah Chapter 10a: Ijarah Chapter 10b: Rhan Contract Chapter 11a: Kafalah Chapter 11b: Wakalah Chapter 12: Bay al-Dayn Chapter 13a: Wadi'ah Contract Chapter 13b: Contract of Sarf
Table of Contents ▼

Definition of Sarf Contract



What is it? (Technical Definition) It is the sale of money-for-money. This specifically refers to the exchange of precious metals, such as the sale of gold-for-gold or silver-for-silver.

Scholar View (Maliki School) The Maliki scholars have a strict definition: they consider it a valid money exchange only if the transaction is specifically gold-for-gold or silver-for-silver.

Authority of Sarf Contract



Evidence from Consensus (Ijmah) There is unanimous agreement (Ijmah) among all Islamic scholars regarding the permissibility of Baya al-Sarf.


Evidence from Practice The contract is considered valid because it has been practiced by people since the time of the Prophet (saw) until the present day without any objections

Conditions of Sarf Contract



Taking Possession The delivery of both currencies must take place at the exact time of concluding the contract (Majlis al-Aqd), before the parties separate.

Equal-for-Equal Transaction If you are exchanging currencies of the same genus (e.g., silver for silver or gold for gold), they must be transacted like-for-like. This rule applies even if the items differ in quality

Freedom from Khiyar al-Shart The currency trading must be free from Khiyar al-Shart, which is an option to rescind (cancel) a sale contract based on conditions set earlier

Non-deferment The delivery of both counter values must be immediate and cannot be deferred (delayed) to a future time.

Application in Islamic Finance (IF)



Spot Forex

Bay al-Sarf is applicable to modern foreign exchange, known as Spot Forex. This transaction is based on the spot rate, and the deal settlement is expected to be completed within two business days after the contract is executed.


Exchange Rates for Different Currencies The majority of scholars permit exchanging different currencies at different nominal exchange rates. This is allowed because different currencies have different intrinsic values and purchasing power.