Is it permissible for a capital provider to authorize an agent to enter into a mudaraba (profit-sharing partnership) contract with a third party?
General Chapter
Al-Mughni
Book of Partnership
Primary text
It is permissible for the capital provider to authorize the agent to give the capital to another party under a mudaraba agreement. Ahmad explicitly stated this ruling, and no contrary opinion is known. In this instance, the first agent acts as an agent (wakil) for the capital provider regarding this transaction. If the agent hands the capital over to another person, the resulting contract is valid provided the first agent does not stipulate a share of the profit for himself. Profit is only due based on capital ownership or labor.
Supporting text
If the first agent stipulates a share of the profit for himself when handing the capital to the third party, the subsequent contract is invalid because the first agent provides neither capital nor labor in that secondary transaction.