Requiring the working partner to guarantee capital in a mudaraba

A question about a capital owner requiring the working partner to guarantee the capital against loss, in which Jordan's General Iftaa Department answered that this is not permitted in a mudaraba: the owner loses his money and the worker his effort, and the worker is liable only if he transgresses or is negligent. ¹

The questioner asked about a capital owner stipulating that the working partner must guarantee the capital in the event of a loss. ¹

The Department answered that a mudaraba is a contract in which the capital owner hands money to a person or company to trade with, the profit being shared between them in an agreed proportion of the whole. ¹ It listed conditions for its validity: the capital may not be guaranteed by the working partner but is exposed to profit and loss; it must be present and handed over, not a debt; profits must be shares of the profit actually made, not a fixed sum or a percentage of the capital; profit must be genuinely realised; and the investment must be in permitted business, not forex, network or pyramid marketing, or a Ponzi scheme. ¹ It said that in a loss the owner loses his money and the worker loses his effort and time, and the worker bears no capital loss unless he transgresses or is negligent, which experts assess; it cited al-Nawawi in Rawdat al-Talibin that the worker's dealings are bound by the owner's interest, like an agent's. ¹ It cited article 628 of the Jordanian Civil Code, under which the capital owner alone bears the loss and any contrary condition is disregarded, and concluded that if the worker's transgression or negligence is established by a sound procedure, he must make good the loss to that extent. ¹

Jordan's General Iftaa Department published this fatwa on aliftaa.jo as no. 3933, dated 23 December 2024. ¹ The museum records this text as a historical document attributed to the body or scholar that issued it; it issues no ruling of its own.