What is the distribution of profit and loss in a Mudarabah (profit-sharing partnership) when one partner acts as the agent for another partner?

General Chapter

Al-Mughni

Book of Partnership

Book 18 · Issue 1 · Bab 1

Open in Qurani

Primary text

If one partner in a Mudarabah takes capital belonging to another, the resulting profit belongs solely to the working partner due to their effort, and the loss falls solely upon that working partner, not upon the capital provider. This is because the profit is a compensation for the action performed, and it is separate from the capital in which they jointly invested. This principle applies analogously when a Mudarib (working partner) enters into a Mudarabah contract with a third party while acting on behalf of the original capital provider; any profit generated must be returned to the original capital provider if returning it causes harm to the first partner.