An Arabic term (مساومة) that denotes bargaining sale. In Islamic finance, it refers to the selling of a commodity at an agreed upon price irrespective of the original purchase price. In other words, the seller is not required to disclose to the buyer what the cost price was. When the cost price is disclosed to a potential buyer, the sale is called murabaha.
In musawama sale, both the seller and buyer try to transact at the best price possible. For the buyer, the best price is the lowest price at which the seller will accept to release the commodity from his possession into that of the buyer. Similarly, the best price in the seller’s perspective is the highest price at which the buyer will agree to obtain the commodity.
This type of sale is also known as a negotiated-price sale.
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