Mudarabah Agreement

Mudarabah Agreement

Posted by fran | 28 septiembre, 2021

If mudarabah`s agreement becomes fasid for some reason, the status of the Mudarib will be like an employee, which means that Mudarabah is a kind of partnership. Both parties participate in the profits generated by the funded activity. The parties are free to agree on the profit distribution ratio (70% – 30% or 50% – 50% or other). However, unless they reach an agreement when the contract is taken into operation, the latter point is not in conformity from the point of view of Sharia law. In addition, the Sharia requirement in Mudarabah is that the entire capital must be paid upon signing the contract. It is not allowed to pay it later or in instalments. Rub-ul-mal may impose on the agent all (reasonable) instructions and conditions if they are acceptable to the agent, they will form part of this contract. From the beginning of the operation, the financier does not have the right to interfere in everyday affairs. If the agent does not follow the instructions and does not meet the conditions, he is responsible for the loss of capital. The Mudarib do not guarantee capital or profit to the financier.

On the contrary, it promises or promises well-managed honesty. This is the source of moral hazard and unfavorable selection to Mudarabah. Mudarabah is a kind of Islamic financial transaction in which there is a contract between two parties. One of the parties will give the capital and the other will provide the labor. This type of partnership of Islamic finance is in accordance with Sharia law. This agreement is a kind of profit-sharing and the distribution of profits is determined before the contract is signed. THE MINISTER – Lawyers from all major law schools agree on the legitimacy of mudarabah transactions. In this context, they quote texts from the Qur`an and the Sunnah. In the Qur`an, the root of the word mudarabah, d-r-b, is used in a verse that clearly indicates the legality of trade: and others who go to earth and seek the grace of the Almighty (73:20). In the Sunnah, it is said that Ibn`Abbas said: “Our tribal leader, al`Abbas ibn`Abd al Muttalib, whenever he poured money into Mudarabah, would tell his partner that he cannot cross the water with his money, camp in a dry riverbed or buy a mount divided with it. If his partner did any of these things, he would be held personally responsible. When the news of these conditions reached the prophet of Allah, peace be there, he maintained. A – There is no legal obstacle to setting limits on the extent to which the bank is willing to finance a customer in its initial agreement, nor to indicate the percentages of profits for each De Murabahah operation if the bank obtains the customer`s order, understanding that the order is the customer`s promise to purchase.

However, a purchase commitment is not the same as a sale, but a binding agreement, but at the moment when the sale is concluded. (b) the guarantees and guarantees shall be entered in the contract, but not against profit or payment in capital. On the contrary, only against losses due to negligence or mismanagement and late repayment of capital and profits after the end of the Mudarabah. The term refers to a form of business contract in which one party contributes capital and the other personal effort. The share of profits on a pro rata basis is fixed by mutual agreement. But the loss, if at all, is borne only by the owner of the capital, in which case the entrepreneur receives nothing for his work. The financier is known as “rabal-maal” and the entrepreneur as “mudarib”. As a financing engineering taken over by Islamic banks, it is a contract in which the entire capital is provided by the Islamic bank, while the operation is managed by the other party.

The profit is divided under pre-agreed terms and the loss, if it exists, unless it was caused by negligence or breach of the contractual conditions by the “Mudarib”, is borne by the Islamic bank. The bank passes this loss on to depositors. (At least one scholar – M.S. Khattab – questioned the basis of Islamic law for the two-tier Mudarabah system and said there were no cases where the Mudharib transferred funds to another Mudharib. [Note 3] In principle, the owner of the capital does not have the right to interfere in the management of the enterprise, for which the contractor is solely responsible. . . .

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