Chapter: The Ruling on an Invalid Qarad

Every invalid qarad, once the funds have already been put to use, is treated as a standard qarad (qarad al-mithl) rather than as remuneration at the market wage (ujrah al-mithl). This is the report transmitted by ʿAbd al-Malik from Mālik.

Ibn al-Qāsim, however, relates another view from Mālik: an invalid qarad is of two kinds. In one case it reverts to the market wage alone—namely, when the investor stipulates a set term for the agent and restricts him to act only under his direct supervision. In every other case it reverts to both the standard qarad and the market wage.

The difference between a standard qarad and the market wage is that the former is tied to profit: if the venture yields no profit, the agent receives nothing. The market wage, on the other hand, is a debt owed by the capital owner whether the venture earns a profit or not.