and the promisee has incurred an expense in reliance upon that promise. In such a case the binding force is realized either by carrying out the promise itself or by compensating the actual loss that has arisen from non-fulfilment without a valid excuse.

Third: Mutual promises—those made by both parties—are permissible in a murābaḥah sale on condition that either party, or both, retain an option to withdraw. If no such option exists, the mutual promise is impermissible, because a binding bilateral promise in a murābaḥah transaction effectively takes the place of the sale itself, and the Prophet ﷺ forbade a person to sell what he does not own.

The conference recommends:

In view of its observation that the majority of Islamic banks devote most of their activity to financing through murābaḥah to the purchase-orderer, it advises the following:

First: All Islamic banks should broaden their operations across the various means of economic development, especially by establishing industrial or commercial projects through their own efforts or by entering into participation or muḍārabah (profit-sharing) arrangements with other parties.

Second: The practical cases of applying murābaḥah to the purchase-orderer in Islamic banks should be studied, so that guiding principles may be formulated to prevent errors in implementation and to ensure compliance with the general rules of the Sharia and the specific rulings on this type of murābaḥah. Allah knows best.

Resolution of the International Islamic Fiqh Academy on the Problems of Islamic Banks: Resolution No. (76):

In the name of Allah, the Most Gracious, the Most Merciful.
All praise is due to Allah, Lord of the worlds, and may Allah’s blessings and peace be upon our master Muhammad, the Seal