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Are the aforementioned conditions considered a violation of Sharia and a vitiation of the Mudarabah contract? Is the mudarib (agent) entitled to claim ownership of the shop? Is it permissible to expedite a portion of the profit before the Mudarabah period ends?

1 min readAlso available in العربية

Firstly: In a Mudarabah contract, it is impermissible to stipulate that the loss be borne by the worker. The loss is borne by the owner of the capital, and the worker loses his effort, unless there was negligence or dereliction on his part. This condition is void, and there is a difference of opinion among jurists as to whether it invalidates the contract or not.

Secondly: If the Mudarabah is فاسد (irregular/invalid), then all profit belongs to the owner of the capital, and the worker is entitled to an ajr al-mithl (customary wage) for his work. It is also said that he is entitled to a ribh al-mithl (customary profit), which is what resembles the profit percentage in valid Mudarabah contracts.

Thirdly: If the owner of the capital rented the premises himself, then the usufruct of the premises belongs solely to him, and the worker does not share in it. However, if it was rented after agreeing on the Mudarabah and its rent was paid from the Mudarabah's profit, then both are partners in its rental until the end of the contract.

Fourthly: Profit in Mudarabah is not distributed until the capital is liquidated and converted into cash, or by valuing the remaining goods. It is permissible to distribute apparent profit on account, but it is an unstable ownership that is confirmed by the final distribution after the liquidation of the capital.

Fifthly: A Mudarabah contract is not binding and either party may terminate it, unless the worker has commenced work, or if a specific duration has been agreed upon.

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

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