Why is determining the profit margin from invested capital considered unlawful (haram)?
The condition for , which is entrusting money to someone to invest it, is that both parties agree on a common percentage of the profit, if any is realized. It is not permissible to stipulate a fixed sum or a percentage of the capital as profit. This is because stipulating a specific amount may lead to the invalidation of the partnership, as scholars have unanimously agreed; for the required profit may not be realized, or it may be less than what was stipulated, which would harm the worker or the owner of the capital. The legitimate method for determining profit is to specify a known percentage of the total profit for each partner.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
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