Mudarabah
Mudarabah is a partnership in which one party provides capital and another provides labor or expertise. Profits are shared by an agreed ratio, and losses fall on the capital provider alone, barring negligence. It is a recognized alternative to interest-based finance.
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See the term in context
Is it permissible for the owner of the capital in a Mudarabah company to restrict the Mudarib (entrepreneur) to a specific type of work?
Al-Kasani holds that the ruling on restricted Mudarabah (commenda) is the same as that on unrestricted Mudarabah, except for the extent of the restriction. If the restriction is beneficial, it is upheld; otherwise, it…
Is it permissible to eat from the parents' money if all of it is profit or capital from a corrupt speculation (mudarabah), or if there is another lawful income? And what is more befitting to do if the son is able to spend on himself? And will the mother's crying, anger, and displeasure harm the son if he abstains? And is it obligatory for the son to inform the father about the ruling on the money or the contract if it will cause severe anger?
A Muslim is not permitted to enter into a transaction whose ruling he does not know. A Mudarabah (profit-sharing partnership) in which the profit is a percentage of the capital is a void Mudarabah by scholarly…
If there is no liquidity for the zakat on money invested in an Islamic speculative partnership (mudarabah), is the zakat deferred until the profit is received after three years? And are the profits subject to zakat along with the principal at a rate of 2.5%, or are only the profits subject to zakat at a rate of 10%? And is zakat paid once or three times for the three years?
The [Zakat] hawl (one-year cycle) for money is not interrupted by its entry into mudarabah (speculative partnership). So, if the Zakat on money was due in Ramadan, and then it was invested in mudarabah (trade goods),…
Questions that use it
What is the ruling of Islamic law regarding guaranteeing money when participating in a Mudarabah that turns out to be fraudulent, knowing that one of the partners collected a larger sum, and does the agent guarantee the money if the Mudarabah involves risk?
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?
Are the profits earned from a Mudarabah contract, whose capital was merchandise valued at $36,000, and the profits are divided into thirds (one-third for the maternal uncles, one-third for the Mudarib (managing partner), and one-third for expenses), halal? Is the contract Islamically permissible? And what is the solution if the answer is negative, especially after most of the funds have been spent?