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Ruling 2120

A prepayment transaction is when a person sells a commodity that has been defined in general terms for an amount that is paid immediately, and the seller hands over the commodity after some time. Therefore, if the buyer says, for example, ‘I give you this money so that after six months I take such and such commodity’, and the seller responds by saying, ‘I accept’; or if the seller takes the money and says, ‘I sell such and such commodity and I will hand it over after six months’, the transaction is valid.