Musawamah

An Islamic finance term that describes a sale in which the seller is not obligated to disclose the price paid to create or obtain the good or service. This defers from murabaha, where a buyer knows the cost of the underlying asset.

Musawamah usually occurs when it is difficult to determine what the cost of a particular good or service was, or when the good is comprised of a pool of products. In order to comply with Shari'ah, there are many restrictions to a musawamah, including:

  • The underlying asset must be in existence and in the sellers’ possession at the time of the sale.
  • The sale must occur instantaneously, future sale dates are void.
  • The asset must be of value and usable.

Investment dictionary. . 2012.

Look at other dictionaries:

  • musawamah — United Kingdom A commodity trading arrangement similar to murabaha financing. The customer requests the bank to purchase certain assets or commodity from a third party. Unlike a murabaha (where a buyer knows the cost of the underlying asset), in… …   Law dictionary

  • Islamic banking — Banking A series on Financial services …   Wikipedia

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