2213. Advance transaction or purchase by advance payment means that a buyer pays the price of a commodity as a whole and takes its possession at a later time. Hence, the transaction will be in order, if, for example, the buyer says: “I am paying this amount so that I may take possession of such and such commodity after six months”, and the seller says, “I agree”, or the seller accepts the money and says: “I have sold such and such thing and will deliver it after six months”.
2214. If a person sells, on advance payment basis, coins, which are of gold and silver, and takes gold or silver coins in exchange for them, the transaction is void. But, if he sells a commodity or money which is not of gold and silver, and takes another commodity, or gold or silver money in exchange, the transaction is in order. And the recommended precaution is that one should take money and not other commodity in exchange for the commodity sold.
Conditions of Advance Transaction2215. There are 6 conditions of advance payment transaction:
I. The characteristic, due to which the price
of a commodity may vary, should be specified. However, it is not necessary
to be very precise, it will be sufficient if it can be said that its
particulars are known. Hence, advance transactions of bread and meat,
hides and the like, if it is not possible to specify their characteristics
in a way that they are clear for customer, are void.
II. Before the buyer and the seller separate
from each other, the buyer should hand over full amount to the seller, or
if the seller is indebted by way of cash to the buyer for an equivalent
amount, the buyer can adjust it against the price of the commodity, if the
seller agrees to it. And if the buyer pays certain percentage of the price
of that commodity to the seller, the transaction will no doubt be valid
equal to that percentage, but the seller can rescind the transaction.
III. The time limit should be stipulated
exactly. If the seller says that he would deliver the commodity when the
crop is harvested, the transaction is void, because, in this case, the
period has not been specified exactly.
IV. A time should be fixed for the delivery
of the commodity when the seller is able to deliver it, and the commodity
is not so scared that he cannot do it.
V. The place of delivery should be specified.
However, if that place becomes known from their conversation, it is not
necessary that its name should be mentioned.
VI. The weight or measure of the commodity should be specified. And there is no harm in selling through advance payment contract, a commodity, which is usually bought and sold by sight. However, for such a deal, one must be careful that the difference in the quality of individual items of the commodity must be negligibly small, like in the cases of walnuts and eggs.
Rules of Advance Transaction
2216. If a person purchases a commodity by way of a advance payment, he is not entitled, till the expiry of the stipulated period of delivery, to sell it to anyone, but there is no harm in selling it to any person after the expiry of the stipulated period, even if he may not have taken possession of it yet.
2217. In advance payment purchase transaction, when the seller delivers at the stipulated time the commodity, which he had sold, the buyer should accept it.
2218. If the commodity which the seller delivers is of inferior quality to that which was agreed upon, the buyer can reject it.
2219. If the seller delivers a commodity different from the one he had sold to the buyer and the buyer agrees to accept it, there will be no objection to it.
2220. If a commodity which was sold by advance payment becomes scarce at the time when it should be delivered, and the seller cannot supply it, the buyer may wait till the seller procured it, or even cancel the transaction, and take the refund.
2221. If a person sells a commodity promising to deliver it after some time, and also agrees to take deferred payment for it, the transaction is void.