Types of Contracts
It refers to the sale of a commodity at a disclosed cost-plus-profit price. The markup can either be a percentage of the selling price or a lump sum amount and the sale price cannot be changed.
The contract can be concluded without a prior promise (Ordinary Murabaha) or with a prior promise (Murabaha to Purchase Orderor/Banking Murabaha).
SALE ON NEGOTIATION (MUSAWAMA)
It refers to the sale of a commodity at the cost-plus-profit price. Under Murabaha, the seler discloses the purchase price and the profit markup. However, under Musawama, the sale is concluded after negotiations on the sale price and not referring to the cost and profit of the commodity.