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Islamic Finance




Non-Binding MPO


It stands for a non-binding murabaha to the purchase orderer; A non-binding MPO is a murabaha to the purchase orderer (MPO) that is accompanied with a non-binding promise/ wa’ad ghair mulzim which constitutes a wa’ad (promise) in which the promisor (al-wa’ed) is under no legal and religious obligation to fulfill the act of purchase towards the promisee (al-maw’uood).

In this type of murabaha, under a wa’ad ghair mulzim neither party promises or undertakes to enter into an effective contract when the object of sale has been procured by the seller. In other words, with a nonbinding promise the seller or orderer are under no shari’a or legal obligation to conclude the contract when the underlying commodity becomes in the possession of the seller.



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