Written by: Fatwa Saudi Fatwa Committee
Both parties share in the profit based on their agreement, where the share of the profit is pre-determined and specific, such as one-half, one-third, etc. In this way, both parties are partners in the product of the capital, and the profit is shared according to the agreed terms.
[Permanent Committee for Islamic Research and Ifta, Fatwa 19912]
Issue of Profit and Loss in Mudarabah
In Mudarabah, if there is a loss, particularly in the capital, the person managing the business (the agent) will not bear the loss, provided there is no negligence or misconduct on their part. The loss refers to a reduction in the capital, which belongs to the owner of the capital. Therefore, the loss will be borne by the owner of the capital, and any calculation of the loss will be made from their funds, while the agent’s labor is wasted.Both parties share in the profit based on their agreement, where the share of the profit is pre-determined and specific, such as one-half, one-third, etc. In this way, both parties are partners in the product of the capital, and the profit is shared according to the agreed terms.
[Permanent Committee for Islamic Research and Ifta, Fatwa 19912]