Is it permissible to set a time limit (taqit) for a Mudarabah (profit-sharing) contract?
General Chapter
Al-Mughni
Book of Partnership
Primary text
Setting a time limit for a Mudarabah contract is valid, such as stipulating that the partnership lasts for one year, after which the agent must cease buying and selling. This is supported by the permissibility of specifying a type of chattel (property) for the transaction, which validates setting a time limit for the duration, analogous to agency (Wakala). Furthermore, the owner of the capital (Rabb al-Mal) has the right to prevent the agent from buying or selling at any time, provided the owner agrees to take back capital in the form of merchandise (Article of Trade). Stipulating a time limit is therefore stipulating a condition consistent with the contract's nature, making it valid. Ahmad permitted a scenario where a one-month Mudarabah converts to a loan (Qard) after the period expires, even if the capital remains merchandise at that time, requiring the sale of the merchandise first to settle the loan obligation.
Supporting text
There are two reported opinions regarding the validity of stipulating a time limit. One view holds that it is invalid. This position is adopted by Al-Shafi'i, Malik, and it is the preferred opinion of Abu Hafs Al-'Ukbarī. The objections raised are threefold: first, since the contract occurs without restriction, imposing a termination point invalidates it, similar to marriage; second, the time limit is not intrinsic to the contract's requirement nor does it serve a benefit within it, similar to stipulating that no selling shall occur, which contradicts the requirement that the capital remains liquid (naad); third, it causes harm to the agent who might realize profit by retaining the merchandise beyond the stipulated time.