Restructuring the mudaraba contract: Hussain enters into a mudaraba agreement with Hasan, who will be the mudharib.
Question:
Restructuring the mudaraba contract: Hussain enters into a mudaraba agreement with Hasan, who will be the mudharib. The terms of the agreement are as follows:
a. Hasan gets $4,000 monthly salary, whereas Hussain gets 5% of his capital amount every year in addition to any profits, even in the case of losses.
b. Hussain provides 70% of the capital; Hasan provides the rest.
c. Hussain and Hasan share the profits and losses equally.
d. Losses are shared by Hussain and Hasan in the capital contribution ratio.
e. Hussain will take an active part in the management of the mudaraba.
Discuss the above scenario from the fiqh point of view of a mudaraba contract. If you are called to advise the partners regarding compliance with the Sharia, how will you restructure the contract to be according to mudaraba principles? What other option is available if the partners do not want to make too many changes to their contract?
Step by Step Answer:
Principles Of Islamic Accounting
ISBN: 9781119023296
1st Edition
Authors: Nabil Baydoun, Maliah Sulaiman, Roger J. Willett, Shahul Ibrahim