Urbun refers to a sale in which the

Urbun refers to a sale in which the buyer deposits earnest money with the seller as a part payment of the price but agrees that if he fails to ratify the contract he will forfeit the deposit money which the seller can keep. A call option is similar to bai al-urbun in the sense that the seller does not return the premium or advance payment to the buyer in case the latter does not exercise the purchase option and confirms the contract. However, in case of a call option, the buyer loses the option premium even if the option is exercised and the contract is confirmed. In case of bai al-urbun, however, the option premium is adjusted in sale price when the contract is confirmed. All the schools of fiqh except the Hanbali school find bai alurbun unacceptable. These scholars have found the retention of earnest money or premium by the seller akin to misappropriation of the property of others. These scholars have primarily relied on the following simple and straightforward hadith narrated by Ibn Abbas “the prophet (peace be upon him) prohibited the sale of urbun” reported in Imam Malik’s muatta.