Murabaha (مرابحة) is the sale of goods at cost plus an agreed profit mark-up (ribh). More specifically, the price quoted for a murabaha transaction consists of the original purchase price and any other expanses incurred by the seller (such as transportation, insurance, storage, etc):
Murabaha cost = acquisition cost + related expenses
Murabaha transactions can only be effected when the seller can faithfully reveals the exact cost incurred in acquiring the item that would become the subject matter of murabaha. If the exact cost cannot be established then murabaha cannot be executed. In this case, the sale can be effected as ordinary sale (ba’i or bay‘) or musawama– i.e., sale without reference to actual cost.
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