Salam is one of the few Islamic contracts where you pay now and receive goods later. The buyer pays the full price upfront, and the seller promises to deliver a specified quantity and quality of goods at a future date.
Historically, Salam was designed to help farmers. A farmer needs cash now to buy seeds and equipment but will not have produce to sell until harvest. Through Salam, a buyer pays the farmer today for wheat that will be delivered in six months.
In modern Islamic banking, Salam is used for commodity financing and trade. The key Shariah requirements: the price must be paid in full at the time of contract, and the goods must be clearly specified (type, quality, quantity, delivery date). Salam cannot be used for gold, silver, or currencies.