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.