UMAIR SALEEM

13030046024

ASSIGNMENT-2
MODES OF ISLAMIC FINANCE

8TH JUNE, 2015

Ba'i al-Musawamah
An Arabic term that denotes bargaining sale. It is a type of sale in which the seller and buyer
negotiate the terms (especially the price) of the subject-matter, i.e., the commodity to be traded
without any preconditions. Unlike non-negotiated price sales (such as murabaha, wadheeah,
etc.), the seller is neither required nor obliged to reveal to the buyer the actual cost of the
underlying commodity. In other words, the profit margin of this sale is concealed by the seller
who usually seeks to sell at the highest price possible. In turn, the buyer attempts to secure the
lowest price possible. And henceforth comes musawamah or bargaining. In this respect, it is
worth noting that bargaining sale and bargain sale have entirely different meanings. Bargain sale
implies the sale of an asset for less than its fair market value for various considerations
(charitable contribution, necessity, etc.).
Businesses normally use musawamah, in that they are interested only in profit, which they earn
through pricing, while Islamic banks mostly use murabaha. This is because direct use of any
benchmark is relatively easier in murabaha than in the case of musawamah. It is easier for the
bank management and the regulators to manage.

Course:

Islamic Banking

Submitted To:

Mr. Talha Zubair

UMAIR SALEEM
13030046024

ASSIGNMENT-2
MODES OF ISLAMIC FINANCE

8TH JUNE, 2015

Ba'i al-Juzaf
Bai al-juzaf is an Arabic term that denotes a sale by estimation, "sale in gross", or lump-sum
sale. The sale of a measurable, countable, or weighable commodity without determining its
quantity, number of units, or weight. This usually involves foodstuffs such as meat, vegetables,
dates, grain, etc. Sharia considers this sale invalid until the purchaser has received the
underlying goods (i.e., taking possession or qabd is an indispensible precondition for the sale to
be shari'a-compatible). This sale has many forms, including:

bai al-subrah.

bai al-juzaf of non-fungible, countable and measurable items (such as heads of cattle,
pieces of land, clothes, etc). According to the majority of fuqaha (jumhur), this form is
permissible (Abu Haneefah and Ibn al-Qattan opined otherwise).

bai al-juzaf of a ribawi item for a ribawi item of the same type (e.g. bai al-muzabanah in
which fresh dates are sold for dried dates). This form of bai al-juzaf is prohibited by
sharia for the potentiality of riba (with respect to ribawi items, the applicable rule is
ignorance in case of similarity is identical to knowledge in case of inequality.

Course:

Islamic Banking

Submitted To:

Mr. Talha Zubair