Y
CHAPTER FIFTEEN
MUDHARABAH
CONDITIONS
COMPARISON
î
à
Y Literally:
DEFINITION
Increase or profit
EVIDENCE Y Technically:
Mudharabah is a contract or a partnership where
CATEGORIES one provides the capital and the other the
entrepreneurship with the profit being shared
CONDITIONS among them with a predetermined condition
COMPARISON
0
à
Y The term mudharabah is derived from the expression making or
DEFINITION performing a journey (Ad-dharb fil ardh) and it is called this
because the agent (entrepreneur) gets profit by virtue of his hard
EVIDENCE work and efforts in performing long journeys.
Y The term Mudharabah was widely known in the classical
literature as Qiradh.
CATEGORIES
Y Imam Nawawi says: A joint-stock company is called Qiradh or
Mudharabah
CONDITIONS
Y It exists between two persons, one of whom supplies fund to the
other to trade with, on condition that the former has a share in
COMPARISON the profit.
Ñ
] ]]
à
1. The profit will be shared between the two parties according to
DEFINITION the terms of their agreement
î. The losses will be borne by the capital provider alone who is the
EVIDENCE financier.
0. The entrepreneur only suffers the frustration of a fruitless effort.
CATEGORIES
CONDITIONS
COMPARISON
5
à]
Y Al-Quran:
DEFINITION
EVIDENCE
CATEGORIES
CONDITIONS
COMPARISON
-
à]
Y Hadith:
DEFINITION Reported By Hakim Bin Hizam that he had stipulated to a
man that if he gave him certain asset to be utilized for
EVIDENCE Muqaradah (Mudharabah, Qiradh) , he must not use it to
purchase livestock, or carries it (travel) through the sea, or
drop by at the oasis, if the man committed any of the above,
CATEGORIES
he is considered to be the guarantor of my property
CONDITIONS
COMPARISON
r
ë
à
1. Sahibul Mal
DEFINITION Owner of capital, fund provider
î. Mudharib
EVIDENCE Entrepreneur
0. Ra·sul Mal
CATEGORIES Capital
Ñ. Al-Amal or Mashru·
CONDITIONS
Business Venture or projects
5. Ribh
COMPARISON
Predetermined share of profit
-. Sighah
Ijab (Offer)
Qabul (Acceptance)
à
DEFINITION profit
profit
EVIDENCE
Sahibul Mal Mudharib
Ijab &
(Owner of
Capital)
Qabul (Entrepreneur)
CATEGORIES
CONDITIONS
Ribh
COMPARISON Ra·sul-Mal
Mashru· (Predetermined
(Capital)
(Project) profit rate)
9
]
à
COMPARISON
11
] à
à
Y ] ]
DEFINITION 1. Must be in the form of money and not commodities since
commodities fluctuate in price and cause uncertainty and
EVIDENCE ignorance
î. The capital must be clearly specified, determined and known
CATEGORIES at the time of the contract
CONDITIONS
COMPARISON
1î
] à
à
Y ]
DEFINITION 1. The distribution of profit must be determined proportionally
between the capital provider and the entrepreneur
EVIDENCE î. The pre-determined profit must be in ratio form or
percentage and not in fixed amount
CATEGORIES
CONDITIONS
COMPARISON
10
à]
à à
? ?
DEFINITION The capital is financed by one party, The capital is financed by all the
which is the capital provider or the shareholders according to the
owner of the business proportion agreed upon by all parties
EVIDENCE
The capital must be in the form of cash Any type of property that could
CATEGORIES money normally be assessed and have certain
commercial value could be considered
as an acceptable source of capital.
CONDITIONS Example; intellectual capital
The entrepreneur will be the only one All the shareholders have the right to
COMPARISON that will conduct the actual business. work and contribute their skills,
The capital provider is not allowed to knowledge, experienc e and expertise
jointly work with the entrepreneur. in the company
The monetary loss will be solely borne The monetary loss will be jointly borne
by the capital provider while the by all the shareholders according to the
entrepreneur will only suffer from a ratio and proportion of their respective
fruitless effort without having to bear share in the partnership
all the capital losses
1Ñ
à ] ë
DEFINITION
EVIDENCE
CATEGORIES
CONDITIONS Y
COMPARISON
15