In Islamic finance, muwa’adah, or mutual promising or bilateral promising, refers to a promise which is issued by a counterparty against a promise issued by another in the same transaction. For example, in murabaha to the purchase orderer, each counterparty issues a promise: the client undertakes to buy the asset from the bank, while the bank undertakes to sell it to the client. However, it is a Shari’a condition that mutual promising is permissible in murabaha transactions provided that one counterparty, at least, has a khyiar (option to rescind the contract).

If such an option is not attached to the contract, mutual promising is not permissible, as mutual promising which is binding on both counterparties renders the contract an actual sale contract even before the underlying asset is available with the seller (in Shari’a, a man cannot sell what he doesn’t own at trade date). In foreign exchange transactions, a mutual promise to purchase and sell currencies is impermissible if the promise if binding. However, a one-sided promise is permissible, whether the promise is binding or not.

Muwa’adah is also known as bilateral undertaking.