Book of Qarad
Chapter: What forms of capital qualify for qarad and what forms do not
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Book of Qarad
In the name of Allah, the Most Compassionate, the Most Merciful.
May blessings and peace be upon our master Muhammad, his family, and his Companions.

Chapter: What forms of capital qualify for qarad and what forms do not

Among the people of Medina, qarad is what the people of Iraq call muḍāraba. All jurists treat it as a contract with its own distinctive rulings, separate from leases, just as ʿarāyā stands apart from muzābana, hawāla from the exchange of debt for debt, and musāqāh from the sale of something not yet in existence. Each of these has therefore become an independent topic with its own legal principles. Qarad, in its nature, resembles musāqāh.

The essence of qarad is that one man hands over a sum of gold dinars or silver dirhams to another so that he may trade with it, seeking Allah’s bounty—journeying through the land if he wishes, or trading while resident. Whatever profit Allah grants on that capital is divided between them according to the proportion they stipulated, whether one-half, one-third, one-quarter, or any other definite share. Qarad is permissible only with minted dinars and dirhams.