What is the ruling if a principal gives money and states, 'Trade with it, and all the profit is yours'?
General Chapter
Al-Mughni
Book of Partnership
Primary text
If the principal states, 'Take this money and trade with it, and all its profit is yours,' the contract becomes a loan (*qard*), not Mudharabah. This is because the initial phrase, 'Take this and trade with it,' is acceptable for both parties, but appending the effect of a loan causes the term to revert to a loan contract.
Supporting text
If the principal adds, 'And you have no guarantee (liability),' this constitutes a loan with a stipulated removal of liability, which is invalid because the liability is not removed by stipulation, similar to explicitly stating, 'Take this as a loan and you have no liability.'