—or one quarter, indeed whatever ratio the two partners freely agree upon, is permissible, provided that each share is clearly defined and no invalid conditions are introduced. This has always been the practice of Muslims in every land of Islam, east and west; I do not know of any country or region inhabited by Muslims where they have abandoned it.
Al-Khaṭṭābī—may Allah sanctify his soul—then said, commenting on Rāfiʿ’s report about leasing for the produce that grows along the stream banks and at the mouths of the canals: “Rāfiʿ has made it clear to you that the prohibition concerns what is uncertain, not what is certain. Their custom was to impose corrupt stipulations and to reserve for the landowner whatever grew on the water-courses and canals, making that produce his exclusive share.
Muzāraʿah is a partnership, and a partner’s share must not be left unknown. It may happen that the crop by the water-courses survives while the rest is destroyed, leaving the cultivator with nothing; that is perilous uncertainty.
Similarly, if the capital-owner in a muḍārabah stipulates a fixed sum of money for himself in addition to his known share of the profit, the muḍārabah is invalid. The two cases are equivalent.
The precedent for muḍārabah in the Sunnah is muzāraʿah and musāqāh, so how can the branch be sound while the root is void?” Thus ends al-Khaṭṭābī’s words—succinct yet profound.
Shaykh al-Islām said: “The Prophet ﷺ only forbade that form of partnership—leasing land in the broad sense—when the landowner stipulates that the produce of a specific plot shall be his. The matter is exactly as al-Layth ibn Saʿd explained: anyone with insight into what is lawful and unlawful, on examining it, will know that it is forbidden.”
It is therefore clear that muzāraʿah and musāqāh are valid, permissible contracts, and that their permissibility is the view of the vast majority of the ummah, past and present; it has always been the practice of Muslims.
A useful note:
Shaykh al-Islām said: “The majority hold that partnership is of two kinds: co-ownership of property and partnership by contract. Partnership by contract does not depend on joint ownership, just as joint ownership does not depend on a contractual partnership, though the two may coincide.
By unanimous agreement, muḍārabah is a contractual partnership—and so are musāqāh and muzāraʿah. Although some jurists claim that the latter two fall under leasing and run counter to legal analogy, the correct view is that they form an independent legal category: they belong to partnerships, not to leases, and they are perfectly consistent with the principles that govern partnerships.”