A type of sale (ba’i) which is effected using down payment or advance money (arbun– عربون) with the condition that if the buyer accepts to complete the sale by taking the object of sale, then the down payment will be treated as part of the selling price (thaman). Otherwise, if the buyer chooses to rescind the sale (refrain from the transaction), the advance money will be forfeited. In this sense, this sale comes with an option (khiyar) to revoke the contract by forgoing the down payment as a penalty on the refraining buyer.

The seller receives a nominal advance on account from the prospect buyer. This advance amount (arbun or down payment or commitment cash margin) gives the buyer the right to decide whether to proceed with the contract or rescind it. If the transaction is struck, the advance will be considered part of the price (thaman), and as such the buyer will have to pay the remaining amount and take delivery of the underlying. And if the transaction is canceled, the seller will keep the advance (arbun) for himself. The buyer, in this sense, is given the time to contemplate the trade so that if turned out to be advantageous to him, the contract will become in effect. Otherwise, it will not. Some contemporary jurists and practitioners base the adaptation of options traded on conventional exchanges on ba’i al-arbun.

Ba’i al-arbun (بيع العربون) is Arabic for sale with a nonrefundable down payment.