Murabaha (also spelled murabahah) is a shari’a compliant mode of debt financing which involves the sale of a commodity mostly for a deferred price. The two parties to the contract are: a financier (usually an Islamic bank) and a client. In its business form, murabaha is initiated when a potential buyer orders a commodity to pay for it with a specified mark-up (profit). The seller accepts and accordingly procures the commodity. Once the commodity is legally possessed by the seller, the buyer is asked to purchase it and takes delivery. As such, the commodity must exist at the time of contract, and must be owned by the seller at that time whether via constructive (qabd hukmi) or physical possession (qabd fe’eli). Furthermore, quality and quantity must be defined in clear-cut terms, and the exact date and method of delivery must also be specified.

Transfer of ownership from the seller to the purchase orderer shall occur upon conclusion of the murabaha contract and this could be corroborated by the seller giving up the right of ownership (takhliyah) to the benefit of the purchase orderer or by the seller giving the purchase orderer unfettered access to the asset, assuming full liability (tamkin).