Is it permissible for two capital providers to engage in a Mudarabah (profit-sharing partnership) with one worker, and what are the rules for profit division when specified?

General Chapter

Al-Mughni

Book of Partnership

Book 18 · Issue 1 · Bab 1

Open in Qurani

Primary text

It is permissible for two individuals to enter into a Mudarabah contract with one worker, providing a thousand units of capital for them both. If the two capital providers stipulate an equal share of the profit for each of them, the contract is valid. Similarly, if one stipulates half the profit for himself and the other stipulates one-third for himself, the contract is valid. In this latter case, the remaining profit share belonging to each capital provider is given to the other capital provider. The basis for this is that the remaining share of profit for one capital provider is half, and for the other, two-thirds. Stipulating equality means one capital provider stipulates a portion of the other's capital profit to the other without work, which invalidates the condition, akin to stipulating a specific amount from one's own capital profit.

Supporting text

It is not permissible if the two capital providers stipulate that the remainder of the profit be divided between them equally (fifty-fifty). This view is attributed to Al-Shafi'i, and the opinion of Al-Qadi suggests its permissibility, a view also narrated from Abu Hanifa and Abu Thawr.