A contract of sale in which the seller reveals (or is under obligation to reveal) to the buyer his actual cost and accepts a marked-down price for the subject-matter. Therefore, the seller incurs a loss from this sale. For example, a bank could sell its holdings of a given metal commodity for less than the acquisition cost for its own short- or long-term considerations (e.g. it might be in dire need of cash). However, there is a considerable deal of counterparty risk arising from any potential dishonesty on the part of the seller as to the “true” disclosure of actual cost.
Ba’i al-mukhasarah is a form of buyu’ al-amanah (trust-based sales). In its literal and technical meaning, it is the opposite of ba’i al-murabaha (cost-plus sale).
It is also known as ba’i al-wadhiya’ah, ba’i al-hatitah, ba’i al-mahattah, or ba’i al-naqeesah.
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