A type of khiyar (option) that is embedded in, or associated with, an Islamic finance arrangement (contract). By nature, the khiyar is part of the structure of the transaction and doesn’t stand out by its own. An example is options that are embedded in sale transactions such as khiyar al-ruyah, khiyar al-aib, khiyar al-shart, etc. A sale with khiyar al-ruyah allows the buyer to see the object of sale before conclusion of the transaction. The buyer has the option to revoke the sale if the object is found to be below his expectations.
In terms of accounting effect, this khiyar (as opposed to a product khiyar) does not give rise to any asset or liability as long as it doesn’t result in any actual or potential losses to the seller (that is, unless it transpires to an onerous commitment or turns its host contract to an onerous contract).
