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Is the agreement concluded between two partners, whereby one provides capital ($10,000) and the other provides a shop (valued at $10,000), with profit and loss to be shared equally, considered a partnership or a Mudarabah, especially after a loss has been incurred and the partner refuses to bear it?

1 min readAlso available in العربية

Mudarabah is a type of partnership where capital comes from one party and labor from the other. If both capital and labor come from both parties, it is a Mudarabah partnership (or sharikat al-inan). If capital comes from both, but labor from only one, some consider it a sharikat al-inan, while others view it as a combination of inan and mudarabah. In these partnerships, whether inan or a combination of mudarabah and inan, losses are distributed proportionally to the capital contributed by each party. So, if the capital is equal, the loss is split equally. However, in pure mudarabah, the loss is borne solely by the capital provider. The jurists have agreed that in all partnerships, losses are distributed among the partners according to each one's capital share. The mudarib (labor provider) in a mudarabah does not bear any of the loss; it is entirely the responsibility of the rabb al-mal (capital provider).

Summarized from the full answer at Ftawy · reviewed Sep 2, 2026

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