Bay‛ Al-Muzayadah

This entry reviews the concept of bay‛ al müzayadah (sale by auction) and analyzes its significance within the broader context of Islamic finance and economics. Featuring elements similar to the transactions of auction in the contemporary practices, this specific type of sale is regulated under the Islamic law on economic and financial transactions with respect to the major rules and prohibitions including principles of gharar (excessive profit), riba (interest), and equity. Islamic approach vis-à-vis this and other similar practices, thus, reveals that the Islamic law recognizes the legality of commercial transactions as long as its cardinal principles are respected and observed.