What is the ruling concerning a Qirad (Mudaraba) contract upon the death or insanity of one of the contracting parties?
General Chapter
Al-Mughni
Book of Partnership
Primary text
The Qirad contract is dissolved immediately upon the death or insanity of either the capital provider (Rab al-Mal) or the working partner (Al-'Amil), because it is a revocable contract, similar to agency (Tawkil). If the death or insanity occurred to the Rab al-Mal, and the capital is in liquid assets (Nadh), and the heir or guardian wishes to continue the contract, it is permissible. The capital and the heir's share of the profit constitute the capital, and the Al-'Amil's share of the profit becomes a known shared ownership right for him. This shared ownership is not prohibited because the partner is the Al-'Amil, which does not prevent disposition. This continuation is permissible because it is a completion of the existing Qirad, not a new commencement. If the capital was in trade goods ('Arud), the apparent view of Ahmad supports its permissibility for the heir to continue, provided the Al-'Amil sells and purchases with the permission of the heirs. This view is supported by Al-Shafi'i because the need to return equivalent goods or their price at varying times, which prohibits commencing Qirad on 'Arud, is absent here as the capital remains and its ruling persists.
Supporting text
A secondary view holds that continuation is impermissible because the Qirad is nullified by death, meaning any continuation would constitute a new Qirad on trade goods, which is generally impermissible unless the goods are valued at the contract date. This second opinion is deemed more analogous because if the capital were liquid, continuation would be a new Qirad, and the Al-'Amil's profit share would become jointly held, potentially leading to the goods being valued higher than their worth upon loss, which is impermissible in Qirad without dispute.