This entry will discuss the nature of the musāwamah transaction, which refers to the bay’ (purchase and sale) contract in Islamic law of obligations. The discussion will cover the musāwamah transaction’s place in Islamic law and economy, its similarities and differences with other contracts, the basic principles to be followed when making a musāwamah transaction, and the transactions that make musāwamah prohibited. The most fundamental economic transaction, which is to be discussed in this article, is the buying and selling of goods, or bay’ in Islamic legal terminology. The dictionary defines bay’ as “to change, exchange, sell, or buy.” However, the contemporary understanding of bay’ in Islamic law is more nuanced. It refers to the exchange of one commodity for another, and it has been recognized as a legitimate transaction throughout human history. This transaction serves as a model for almost all contracts in the Islamic law of obligations. The fundamental principles that govern purchase and sale contracts, as well as the transactions that constitute a violation of this agreement, are articulated in the 29th verse of Surah al-Nisaa. This verse stipulates that bey (buying and selling) is permissible and prohibits interest, underscoring the necessity for economic activities to be grounded in mutual consent. The verse further delineates that consensual buying and selling transactions have become prohibited, along with transactions that fall within the scope of gaining profit through false means, such as interest, bribery, and gambling. The prohibition of the most common form of buying and selling, the mubāmah contract, directly correlates with the adherence to the fundamental principles outlined in the verse. In this regard, the principles that govern the validity of a purchase and sale contract are also applicable to transactions facilitated by sale and purchase contracts. Furthermore, transactions in sale and purchase contracts that are prohibited by certain methods that would distort the nature of the contract and harm the parties are deemed unlawful.