A sale (bay’) in which the seller has the right, as stipulated in the contract, to repurchase the underlying property (an estate like a house or land) from the buyer by refunding the purchase price. The right of redemption is given to the original seller upon an understanding that the buyer will give (i.e., resell) the property back to the seller and receive the original price. The buyer agrees to honor that understanding and hence the name “wafa” which means “honor” or “honoring an obligation”. Bay’ al-wafa is viewed by the majority of jurists (fuqaha) as impermissible. Notwithstanding, contemporary East Asian jurists are of the opinion that this type of sale is permissible under Islamic jurisprudence, where it has been used as the shari’a foundation to develop products for Islamic capital markets.

Bay’ al-wafa is also known in shari’a sources as bay’ al-thanaya (Maliki school of thought) or bay’ ‘uhdah (Shafi’e school of thought).