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Does the transaction remain a legitimate Mudarabah if the Mudarib (fund manager) asks the client to execute buy and sell orders himself due to difficulty accessing bank portfolios? What is the ruling on losses resulting from the client's failure to adhere to the Mudarib's instructions, and is the capital owner obligated to execute the Mudarib's orders without alteration?

1 min readAlso available in العربية

If the action of the capital provider is a right of the mudarib (investor/agent) and the capital provider cannot prevent it, then the capital provider is assisting the mudarib. However, if the capital provider can prevent the mudarib, then the capital provider is acting for himself, unless it is at the mudarib's command, in which case he is assisting him. If the mudarib asks the capital provider to execute a transaction, this does not invalidate the mudarabah (partnership), and the capital provider is assisting in this case. If the capital provider disposes of the capital while it is in cash without the mudarib's permission, he is acting for himself, and he bears his profit and his loss, and this is considered a termination of the mudarabah. However, if the capital is in the form of goods, such as shares, and the capital provider disposes of them without the mudarib's permission, this is not considered a termination; rather, he is assisting the mudarib. The mudarib's request for the capital provider to execute certain orders is considered an authorization for him, and the capital provider is not allowed to act except within what he has been permitted to do. If he exceeds that, he is liable for the loss.

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

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