Are the contracts concluded between the two partners—in their first commercial project and then in the factory project—permissible in Islamic law, considering the conditions of each contract? Can the mudarib stipulate a monthly salary to be deducted from his profits? What is the ideal legitimate method for a partnership contract where the capital is from one party and the work is from the other, with employees involved?

The initial dealing between you is a mudarabah (definition) (profit-sharing partnership), where the capital is from the first party and the work is from the second party. The mudarabah contract is invalidated if the worker guarantees the capital or a portion of the loss, or if there is an agreement on a guaranteed monthly salary for either party. If the mudarabah is invalidated, the owner of the capital is entitled to all the capital and profit, and bears all the loss, while the mudarib (working partner) is entitled to the wage of his like (ajr al-mithl). Among the most important conditions for a valid mudarabah in Sharia (definition) are that each party must have a specified, proportional share of the profit, and that the capital should not be guaranteed by the worker, except in cases of negligence, dereliction, or oversight on his part.