What happens to the price paid when a rescission (Iqalah) occurs in a Salam contract?
Chapter on Guaranteed Salaf (Advance Payment) for a Specified Term
Al-Mughni
Book of Sales
Primary text
Upon rescission, the original price must be returned if it remains, or its equivalent if the subject matter is fungible (mithli), or its value if it is non-fungible (qimi). Regarding exchanging the price for something else, Abu Ja'far al-Sharif and Abu Hanifa hold that the price cannot be diverted to another contract until it is physically taken possession of. This is based on the Prophet's saying: Whoever enters into a Salam for something, let him not divert it to anything else. Additionally, since the object of Salam is guaranteed by the seller (al-Muslam Ilayhi) under the contract, disposal of it before taking possession is impermissible, similar to when it is in the buyer's possession.
Supporting text
Al-Qadi Abu Ya'la and Al-Shafi'i permit taking compensation for the price. This is because the price represents a fixed liability in the debtor's obligation (dhimmah), making it permissible to accept compensation for it, as in the case of a loan (qard). Furthermore, since it is wealth returned due to the termination of the contract, compensation is allowed, like the price in a sale of specific goods upon its annulment. If this view is adopted, the ruling is like that of a loan or a price in spot sales; it cannot be made the subject of another Salam, as that would constitute a sale of debt for debt (bay' dayn bi-dayn).