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The question

What is the ruling on investing friends' money in installment-based trade with a fixed profit from the capital, and how can it be corrected if it is unlawful?

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Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 20261 min readAlso available in العربية
The answer

If the contract includes a guarantee of the principal and a fixed percentage of profit, then it is a فساد (corrupt) Mudarabah, due to the guarantee of the principal and the stipulation of a known (fixed) amount of money. In this case, the profit belongs to the capital owner, and the Mudarib (investor/manager) is entitled to an 'اجرة المثل' (customary wage/fair compensation for his effort). To rectify the contract, the principal should not be guaranteed except in cases of transgression (تعدي) or negligence (تفريط), and the profit percentage should be common (شائعة), not fixed, because guaranteeing a fixed profit invalidates the contract. If a profit is realized, it is divided according to the agreement. If a loss occurs, it is borne by the principal.

Summarized from the full answer at Ftawy · imported

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Source platform
Ftawy
Original fatwa ID
165100
Imported
Translation status
Source text, unreviewed
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