Is a contract valid where one party provides 1000 for Mudarabah, the second party adds 1000 from their own funds, and they agree that the profit split will be two-thirds for the second party and one-third for the first?
General Chapter
Al-Mughni
Book of Partnership
Primary text
The contract is valid, constituting both partnership (Shirkah) and Mudarabah. The reasoning is that since both parties have equal capital contribution, it is permissible for one party to specialize in the work and stipulate an increased share of the profit, similar to a scenario where the worker has no capital. Profit is a consequence of both capital and labor, not capital alone.
Supporting text
The Shafi'i school holds that this contract is invalid because when partnership involves capital, the profit must necessarily follow the capital contribution, not the labor. Furthermore, if the working partner stipulates two-thirds of the profit exclusively for themselves, the contract is invalid because they stipulated a portion of the profit for which they provided no reciprocal compensation, unlike in Shirkah al-'Inan where profit differentiation is allowed due to differentiation in labor from both parties.