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Murabaha is a sale in which the seller tells the buyer the price he paid for the goods and then sells them on for that cost plus a stated profit. It is a recognised and permitted form of sale, and its central condition is honesty about the cost — the seller may only add a profit on what he truthfully declares he paid.
What the sale is
The word comes from ribh (profit). In an ordinary sale the seller may ask whatever price he likes and need not disclose what the goods cost him. In murabaha he does the opposite: he names his cost and names his profit, so the buyer knows exactly what he is paying for and what the seller is earning. Imam Malik's ruling, recorded by Ibn Abd al-Barr in al-Istidhkar, treats this as the established practice: a man buys cloth in one town, brings it to another, and sells it murabaha.
Because the buyer is relying on the seller's word, the whole transaction rests on that word being true. Ibn Abd al-Barr places the failure to disclose squarely "in the category of lying and betrayal in murabaha" — the harm is not a technical defect but a deception of the buyer.
What may be added to the cost
The practical question is which expenses the seller may fold into the "cost" before adding his profit. The scholars differed, and Ibn Abd al-Barr sets their positions side by side.
| Scholar | What may be counted into the cost |
|---|---|
| Malik | Dyeing, sewing and fulling count with profit; freight counts but earns no profit; brokerage, folding, packing, travel costs and house rent are not counted — unless the seller discloses them and the buyer agrees |
| Abu Hanifa | Dyeing, sewing, freight, brokerage, and for slaves clothing and maintenance — all may be added |
| al-Awza'i | Freight and travel expenses are raised onto the price, then he sells murabaha |
| Abu Thawr | Murabaha is valid only on the original purchase price; other expenses may be added only if he does not claim "I bought it for such-and-such" |
Malik's reasoning is the most instructive. Costs that become part of the goods themselves — dyeing, sewing, fulling — follow the goods and may carry profit, just as the cloth does. Costs that were merely incidental to getting the goods to market — brokerage, packing, rent — are not part of what the buyer receives, so charging profit on them is charging profit on something the buyer never got. If the seller wants to recover them, he must say so plainly and let the buyer agree.
When the seller does not disclose
Malik's rule here is precise. If the seller sells murabaha without declaring these expenses, no profit is counted for him on them. If the goods have already passed out of his hands, the freight is counted but no profit on it. If the goods are still there, the sale is dissolved between them — unless the two agree on something permissible between them.
Abu Thawr draws the same line from the other direction: if a man says "I bought it for such-and-such" while having added expenses to the price, the sale is void; if the buyer has already consumed the goods, he owes the value and recovers the price.
The currency question
Malik was also asked about a man who buys goods with gold or silver at one exchange rate, then travels and sells murabaha at a different rate. His answer, which Ibn Abd al-Barr calls "a very good statement," is that if the goods are still intact the buyer has the choice to take them or leave them; if they have passed, the buyer gets them at the price the seller paid, and the seller's profit is calculated on what he bought them for, according to the profit the buyer agreed to.
Murabaha in modern banking
What Islamic banks call murabaha is usually a later form: the bank buys an item because a customer asked for it, then resells it to him at a markup, often on instalments. Contemporary scholars differ on it. The International Islamic Fiqh Academy permits it when the bank genuinely owns and takes possession of the goods before reselling them and the customer is not bound in advance to buy, while Ibn Uthaymeen forbade it as a device for interest, since the bank never wanted the goods for themselves.
Key takeaways
- Murabaha is a permitted sale in which the seller declares his cost and adds a stated profit; it is not a loan and not interest.
- Its validity rests on truthful disclosure — concealing or inflating the cost places the transaction in lying and betrayal, in Ibn Abd al-Barr's words.
- Malik counts dyeing, sewing and fulling with profit and freight without profit, but not brokerage, packing, rent or travel, unless the seller discloses them and the buyer agrees.
- Abu Hanifa is the most permissive on adding expenses; Abu Thawr is the most restrictive, allowing murabaha only on the original purchase price.
- If the seller hides expenses, the profit on them falls away — and if the goods are still present, the sale is dissolved.
Further reading
- Ibn Abd al-Barr, al-Istidhkar, the chapter on bay' al-murabaha
- Imam Malik, al-Muwatta', the book of sales
And Allah knows best.
This is a guide to what the scholars have said, not a fatwa. For your own situation, ask a qualified scholar who can hear the details.