Conditions of Mudarabah with Money
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What are the conditions of mudarabah with money?
Conditions of Mudarabah with Money: That the capital be known, and that it be of the two types of coined currency,Meaning: namely dirhams and dinars, or paper currency. This is because if it were merchandise, its value would vary; it might be worth a thousand at the time of the contract and two thousand or five hundred at the time of settlement. Therefore, the jurists (may Allah have mercy on them) prohibited the capital from being anything other than the two types of currency.And based on their words: If you gave a person cars and said, "This is a mudarabah," it would not be valid; because the price of the cars might be one hundred thousand at the time of the contract and eighty thousand or two hundred thousand at the time of settlement.
And some of the scholars of knowledge said: It is permissible for the capital of a mudarabah to be other than the two types of currency, provided that its value is estimated at the time of the contract, so that the profit or loss is known when the mudarabah is completed. This is the stronger position, and it is the one upon which people are currently acting. People give land for mudarabah and give cars for mudarabah, but it is necessary, as you have heard, to estimate the value at the time of the contract.
The third condition: That the worker's share be a common fraction of the profit,Meaning: meaning that if you give a person one hundred thousand to trade with, you should assign him a share of the profit, such as one-third, one-quarter, or one-half, whatever you agree upon.If you assign him a known amount by saying: If you say, "Take this money and trade with it, and you will have one hundred riyals," this is not valid; because he might not make any profit, or he might make much more than one hundred riyals. Therefore, his share must be a common fraction.
It must also be known,It is not valid to say: so you cannot say, "Take this money and trade with it, and you will have some of its profit,"Rather, it is necessary that you say: but rather, "You will have half of the profit, a quarter, an eighth, a tenth, or the like."
And based on this, if you say: If you say, "Take this money and trade with it in cars, vessels, and fabrics, and you will have the profit from the fabrics, while I will have the profit from the cars and vessels," this is not permissible; because the profit might be in one and not the other. For this reason, the Prophet (peace and blessings be upon him) prohibited this in sharecropping;That a person should enter into a sharecropping agreement with someone and say: saying, "You will have the crop from the east of the land, and I will have the crop from the west," or "You will have the barley crop, and I will have the wheat crop," or the like. These are among the conditions of mudarabah.
Likewise: If the trade incurs a loss, the loss is borne by the capital, and nothing is required of the worker. If he gave him one hundred thousand for a mudarabah and it was lost until it became ninety thousand, it is not permissible for the owner of the capital to impose any of the loss on the worker; because the loss is borne by the capital, and the worker has no share of it.
Conditions of Mudarabah with Money: That the capital be known, and that it be of the two types of coined currency,Meaning: namely dirhams and dinars, or paper currency. This is because if it were merchandise, its value would vary; it might be worth a thousand at the time of the contract and two thousand or five hundred at the time of settlement. Therefore, the jurists (may Allah have mercy on them) prohibited the capital from being anything other than the two types of currency.And based on their words: If you gave a person cars and said, "This is a mudarabah," it would not be valid; because the price of the cars might be one hundred thousand at the time of the contract and eighty thousand or two hundred thousand at the time of settlement.
And some of the scholars of knowledge said: It is permissible for the capital of a mudarabah to be other than the two types of currency, provided that its value is estimated at the time of the contract, so that the profit or loss is known when the mudarabah is completed. This is the stronger position, and it is the one upon which people are currently acting. People give land for mudarabah and give cars for mudarabah, but it is necessary, as you have heard, to estimate the value at the time of the contract.
The third condition: That the worker's share be a common fraction of the profit,Meaning: meaning that if you give a person one hundred thousand to trade with, you should assign him a share of the profit, such as one-third, one-quarter, or one-half, whatever you agree upon.If you assign him a known amount by saying: If you say, "Take this money and trade with it, and you will have one hundred riyals," this is not valid; because he might not make any profit, or he might make much more than one hundred riyals. Therefore, his share must be a common fraction.
It must also be known,It is not valid to say: so you cannot say, "Take this money and trade with it, and you will have some of its profit,"Rather, it is necessary that you say: but rather, "You will have half of the profit, a quarter, an eighth, a tenth, or the like."
And based on this, if you say: If you say, "Take this money and trade with it in cars, vessels, and fabrics, and you will have the profit from the fabrics, while I will have the profit from the cars and vessels," this is not permissible; because the profit might be in one and not the other. For this reason, the Prophet (peace and blessings be upon him) prohibited this in sharecropping;That a person should enter into a sharecropping agreement with someone and say: saying, "You will have the crop from the east of the land, and I will have the crop from the west," or "You will have the barley crop, and I will have the wheat crop," or the like. These are among the conditions of mudarabah.
Likewise: If the trade incurs a loss, the loss is borne by the capital, and nothing is required of the worker. If he gave him one hundred thousand for a mudarabah and it was lost until it became ninety thousand, it is not permissible for the owner of the capital to impose any of the loss on the worker; because the loss is borne by the capital, and the worker has no share of it.