What is the financial implication when the managing partner (Mudarib) incurs a subsequent loss after the capital provider has withdrawn funds?
General Chapter
Al-Mughni
Book of Partnership
Primary text
If the capital provider takes 60 of the capital, and the subsequent remaining capital is lost down to 40, and the Mudarib returns the remaining 40, the Mudarib is entitled to a claim of five units from the capital provider. This is because the withdrawal by the capital provider severs the Mudarabah contract concerning the withdrawn amount, and the subsequent loss in the remaining capital cannot be compensated by the profit earned on the withdrawn portion. The profit that was earned on the withdrawn portion (one-sixth of the 60 taken) is shared between them.
Supporting text
If the Mudarib returns only 20 out of the remaining 40 after the final loss, the principal capital remaining is calculated as 25.