What types of conditions stipulated in a Mudarabah contract are considered valid (Sahih)?
General Chapter
Al-Mughni
Book of Partnership
Primary text
Conditions in Mudarabah are divided into valid and void. Valid conditions include stipulating that the working partner shall not travel with the capital, or that he shall travel with it, or that he shall only trade in a specific city or a specific type of commodity, or that he shall only purchase from a specific man. All these conditions are valid, whether the type of commodity is commonly available or not, and whether the specified man frequently possesses goods or not. This is the view of Abu Hanifa.
Supporting text
Malik and Al-Shafi'i hold that if it is stipulated that the partner must only purchase from a specific man, or a specific commodity, or something whose existence is not general (like red rubies or specific light-colored horses), the condition is invalid because it prevents the purpose of Mudarabah, which is circulation and seeking profit. This is contrasted with stipulations that do not entirely prevent profit, such as restricting trade to a commonly available type of commodity, which is valid. Furthermore, a contract that can be specified by commodity type can also be specified regarding a particular man or commodity, similar to agency (Wakalah). The argument that it prevents the objective is refuted because it only reduces the circulation, and reduction does not invalidate the contract, unlike stipulating that selling must only occur for the price paid (capital), which entirely prevents profit.