Chapter on the Rulings of Muḍāraba (Profit-Sharing Partnership)

The term muḍāraba derives from the Qur’anic expression “travelling through the land” (darab fī l-arḍ), meaning to journey for trade. Allah Almighty says, “And others travel throughout the land, seeking Allah’s bounty” (Q 73:20), that is, they look for sustenance by buying and selling.

In the terminology of the Law, a muḍāraba is: to hand over a specified amount of capital to someone who will trade with it in return for a share of the profit.

This form of transaction is unanimously recognised as lawful. It existed during the lifetime of the Prophet ﷺ and he approved it. Reports to that effect come from ʿUmar, ʿUthmān, ʿAlī, Ibn Masʿūd and others, and no Companion—may Allah be pleased with them all—is known to have dissented.

Reason likewise confirms its permissibility, for people need it: coins—whether silver dirhams or gold dinars—grow only when they circulate in commerce.

Ibn al-Qayyim said, “The muḍārib is simultaneously a trustee, an employee, an agent, and a partner: a trustee when he takes possession of the capital; an agent when he disposes of it; an employee with respect to the labour he performs himself; and a partner once profit appears. For the muḍāraba to be valid, the worker’s share must be specified, for he earns it solely by virtue of that stipulation.”

Ibn al-Munadhir stated, “The scholars are unanimously agreed that the working partner is entitled to stipulate…"