---
title: "What is Tawatu (pre-arrangement)? | IslamicOpenFinance™"
description: "A prior understanding between parties about how linked transactions will unfold, which can change how they are judged."
url: https://islamicopenfinance.com/glossary/tawatu/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Shariah fundamentals](https://islamicopenfinance.com/glossary/#fundamentals)

Shariah fundamentals

# Tawatu (pre-arrangement)

A prior understanding between parties about how linked transactions will unfold, which can change how they are judged.

Tawatu means a pre-arrangement or prior understanding between parties, especially one under which a later transaction is agreed in advance. Bank Negara Malaysia's compilation of Shariah resolutions defines it as pre-arrangement and records the classical view that a sale and repurchase was acceptable only where there was no pre-arrangement to repurchase. AAOIFI's tawarruq standard similarly says that the commodity must not return to the seller through prior agreement or collusion. Whether linked steps were pre-arranged is therefore a central question in reviewing tawarruq and sale-and-repurchase structures.

## Sources

- [Bank Negara Malaysia, Shariah Resolutions in Islamic Finance, second edition, 2010: glossary, tawatu' (pre-arrangement)](https://www.bnm.gov.my/documents/20124/9198675/shariah_resolutions_2nd_edition_EN.pdf)

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

## Related terms

[**Bay al-inah (sale and buy-back)** Selling an asset on deferred terms and buying it back from the same buyer for a lower spot price. Standard setters disagree on it.](https://islamicopenfinance.com/glossary/bay-al-inah/) [**Tawarruq** Buying an asset on deferred payment and selling it to a third party for cash, to raise liquidity. Its organised form is contested.](https://islamicopenfinance.com/glossary/tawarruq/) [**Sell and buy back (SBBA)** An interbank arrangement of an outright sale of securities, promises to reverse it and a later outright sale back at a set price.](https://islamicopenfinance.com/glossary/sell-and-buy-back/) [**Commodity murabaha** Interbank and treasury deals in which commodities are bought and sold on deferred payment to place or raise short-term funds.](https://islamicopenfinance.com/glossary/commodity-murabaha/)

**Shariah fundamentals**

1. [Riba](https://islamicopenfinance.com/glossary/riba/)
2. [Gharar](https://islamicopenfinance.com/glossary/gharar/)
3. [Maysir](https://islamicopenfinance.com/glossary/maysir/)
4. [Shariah](https://islamicopenfinance.com/glossary/shariah/)
5. [Fiqh al-muamalat](https://islamicopenfinance.com/glossary/fiqh-al-muamalat/)
6. [Maqasid al-Shariah](https://islamicopenfinance.com/glossary/maqasid-al-shariah/)
7. [Riba al-nasiah](https://islamicopenfinance.com/glossary/riba-al-nasiah/)
8. [Riba al-fadl](https://islamicopenfinance.com/glossary/riba-al-fadl/)

[All 221 terms](https://islamicopenfinance.com/glossary/)