Islamic Fiqh > Companies and leases > Mudaraba (capital-management partnership) > Is the qirad a binding or a revocable contract?
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Updated on 25 September 2026 at 6:57 PM
This part belongs to the full section: All sections of this part.
The jurists of the four schools, the Hanafis, the Malikis on the well-known view, the Shafi'is and the Hanbalis, agree that the mudaraba before work is revocable: each of the worker and the capital owner may dissolve the contract before engaging in the work.
A view among the Malikis says: binding by the contract.
They then differed, once the muDarib has worked with the mudaraba money, over whether he may dissolve the mudaraba contract or not, save with his partner's authorization.
The majority of the jurists, Hanafis, Shafi'is, Hanbalis, and Malikis in a view, hold that the mudaraba contract is revocable: each of the capital owner or the worker may dissolve the mudaraba contract whenever he wishes, whether before the work or after it; but with detail among them, stated as follows:
The Hanafis said: the mudaraba contract is not binding, and each of the two, I mean the capital owner and the muDarib, may dissolve it; but subject to its condition being present, which is knowing his partner.
If the capital owner dismisses the muDarib and the latter does not know of his dismissal until he has bought and sold, his disposal is permitted; because he is an agent, and dismissing an agent deliberately depends on his knowledge.
If the muDarib learns of his dismissal while the money is in goods, he may sell them, and the dismissal does not prevent him from that; because the mudaraba was completed by the purchase and became valid, so dismissal is no longer possible; because his right has become established in the profit, which only appears through division, and that is built on the capital, which is only liquidated by sale.
Once he has sold the goods, he may not buy something else with their price; because they have become cash.
It is also required that the capital be an object at the time of dissolution, in dirhams or dinars; to the point that if the capital owner forbids the muDarib to dispose while the capital is in goods at the time of the prohibition, his prohibition is not valid and he may sell them; because he needs to sell them into dirhams and dinars so that the profit appears, and the prohibition and dissolution would be nullifying his right of disposal, which he does not possess. If the capital is in dirhams or dinars at the time of dissolution and prohibition, the dissolution and prohibition are valid; but he may convert the dirhams into dinars and the dinars into dirhams; because that does not count as a sale, given their unity in being money; and he may sell them of the capital's kind by juristic preference; because the profit only appears thereby.
If the capital owner and the muDarib part ways while there are debts in the money and the muDarib has profited, the judge compels him to discharge the debts; because he is like an employee: the profit is his as wages, and his work was performed for reward, so he is compelled to complete it like an employee (Bada'i' al-Sana'i', 6/109; Al-Jawhara al-Nayyira, 3/460 and 461; Al-Hidaya, 3/209; Tabyin al-Haqa'iq, 5/207; Majma' al-Damanat, 2/664; Al-Fatawa al-Hindiyya, 4/339; Durrar al-Hukkam, 3/481).
The Shafi'is said: the qirad is among the revocable contracts; each of the two may dissolve it whenever he wishes, without the other's presence or consent; because it is a contract involving the worker's disposal over the capital's ownership with the capital owner's authorization, so it is revocable like agency; because the qirad is at its outset an agency and at its end either a partnership, if we make the worker an owner upon appearance, or a ju'ala if we do not make him an owner by it; and all of these are revocable contracts.
Dissolution is effected by his saying: 'I have dissolved the qirad contract', or 'I have lifted it', or 'I have annulled it', or 'do not dispose after this', or the like; and by taking back the money: if he takes back part of it, it dissolves for that part and remains over the rest; and by freeing his slave and his slave-mother, like agency.
If the worker is detained and prevented from disposing, or he says: 'there is no qirad between us', or he sells what the worker bought for the qirad, he is dismissed according to the two sounder views; on the other view he is not dismissed.
It is said: according to the difference between his having or not having a purpose.
It is for the worker, after dissolution, to sell the qirad money if he expects profit in it, as if he secured a market or an interested buyer; and he does not buy, the contract having been lifted, even though he has no share in it.
The worker is obliged, on the sound view, to liquidate the debt of the qirad money and the profit together if the qirad is dissolved by one of them or by both; he must therefore liquidate the entire debt, so as to return it as he took it.
The shape of the matter is that the owner had permitted him to deal on credit; when the qirad is dissolved and there is a debt, the worker must collect it in order to liquidate it, whether there is profit there or not.
It is also incumbent on the worker to liquidate the capital if what is in his hand at the dissolution is goods and the owner demands liquidation, whether or not there is profit in the money, on the sound view of the madhhab; he turns it into cash so as to return it as he took it; and likewise if what is in his hand is cash of another kind than the capital, or of its kind but of another quality, like sound coins and clipped ones: that is like goods.
If the ruler demonetizes the cash on which the qirad ran while the money is in goods, it is returned according to the original. It is said: according to the event.
If the owner does not demand liquidation, it is not obligatory, unless the money is interdicted against the owner: his share in the liquidation then becomes obligatory.
If the owner says: 'do not sell, and we divide the goods by the appraisal of two just men', or says: 'I give you your share of the profit liquidated', he is complied with; likewise if he consents to take the goods from the worker at their value, with no other volunteer; if inflation then occurs, it has no effect.
What exceeds the capital's amount is excluded, so he is not obliged to liquidate it; it is goods in which two shared, neither being obliged to sell it; yet if selling part diminishes its value, like a slave, liquidating the whole is required of him.
The worker may not delay the sale until the season when the goods fetch high prices; because the owner's right is immediate.
It is said: liquidation is not required of the worker if he did not profit, since there is no benefit in it for him; because the purpose of the sale is for the profit to appear so the worker reaches his right from it, and this meaning has lapsed.
If the owner takes back part of the qirad money before any profit or loss appears in it, the capital becomes what remains after what was taken back; because nothing was left in his hand besides it, as if he had from the outset limited himself to handing him that: if it was a hundred and he takes back ten, the capital becomes ninety; because nothing remained in his hand besides it.
If the owner takes back without the worker's consent after the profit has appeared, what is taken back is shared between profit and capital; because there is no distinction, in proportion to the total profit; and the capital does not take on the ruling of the remainder, because the worker's ownership has settled on what is specifically his of the profit according to the condition, so it does not fall away with any loss occurring afterwards.
As for when the taking back is with the worker's consent: if he and the owner intended taking from the original, it is set apart as such; or from the profit, likewise; but the worker owns from what is in his hand the equivalent of that by sharing; if they left it unspecified, it is carried to sharing; and the more likely, as Ibn al-Rif'a said, is that the worker's share become a loan; al-Isnawi transmitted it from him and endorsed it, then said: when the taking back is without his consent, his disposition over his share does not take effect, even if he did not own it upon appearance.
Its example: the capital is a hundred dirhams and the profit twenty of them; the owner takes back twenty of that; the profit in this example is a sixth of all the money; the amount taken back, which is the twenty, has a sixth of it, that is three dirhams and a third, counted from the profit; there then remains established for the worker what was stipulated for him, namely one dirham and two-thirds if half the profit was stipulated for him; and the remainder of the amount taken back, sixteen and two-thirds, is from the capital, which returns to eighty-three and a third. If what is in his hand returns to eighty, what was established for him does not lapse: he takes from it one dirham and two-thirds and returns the remainder, which is seventy-eight dirhams and a third.
If the owner takes back part of it after a loss has appeared, the loss is distributed over what was taken back and the remainder after it; then compensating the share of what was taken back, which is twenty, is not required if the money profits afterwards; because if he returned all of it after the loss, nothing would be required of him; and the capital becomes what remains after what was taken back and its share of the loss.
Its example: the money, that is, the capital, is a hundred, and the loss incurred in it is twenty; then the owner takes back twenty; a quarter of the twenty, which is the whole loss, as the share of what was taken back from it, is five; it is as if he had taken back twenty-five; and the capital thereafter, after what was taken back and its share of the loss, returns to seventy-five; because when we distribute the loss over the eighty, every twenty bears five, and the twenty taken back bears five, leaving what was mentioned; if he profits afterwards, it is divided between them as profit according to what they stipulated (Rawdat al-Talibin, 3/761 and 762; Al-Bayan, 7/197; Mughni al-Muhtaj, 3/357 and 360; Nihayat al-Muhtaj, 5/272 and 276; Al-Najm al-Wahaj, 5/280 and 283; Al-Dibaj, 2/439 and 441).
The Hanbalis said: the mudaraba is among the revocable contracts; it dissolves by either party's dissolution, whichever it is, and by his death, his insanity and his interdiction for prodigality; because he disposes of another's money and is therefore like an agent, with no difference between what precedes disposal and what follows it.
When it dissolves and the money is liquidated without profit, its owner takes it; and if there is profit in it, they divide the profit according to what they stipulated.
If the mudaraba dissolves and the money is in goods and they agree on selling it, dividing it or taking it, it is permitted; because the right does not exceed them; the goods are therefore borne by him and he pays the worker's share; because he removed the sale from the worker.
If the capital owner resorts to a stratagem to appropriate the profit exclusively, such as when the worker bought provisions in summer to profit in winter, or expects a season or a returning caravan: his right remains from the profit; because the origin of the madhhab is that stratagems have no effect.
If the price rises afterwards, that is, after the valuation to the owner and his payment of the worker's share, the muDarib may not claim his share, on the sound view of the madhhab, just as if it rose after his sale to a stranger.
If the capital owner does not consent to take goods and demands the sale, or demands it from the outset without dissolving the mudaraba, he gets that; and the sale is imposed on the muDarib unconditionally, on the sound view of the madhhab, even if there is no profit in it, and he receives its price; because he must return the money liquidated as he took it.
It is said: he is not compelled if there is no profit in the money, or if there is profit but the worker waived his right to it.
If the worker demands the sale and the capital owner refuses while profit has appeared in the money, the owner is compelled to sell; because the worker has a right in the profit, which only appears through sale; and if no profit has appeared he is not compelled; because he has no right in it, and its owner consented to that; so he is not compelled to sell it.
If the capital owner demands the sale and the worker refuses, there are two views: one, that the worker is compelled to sell; because he must return the money liquidated as he took it. The other: that he is not compelled if there is no profit in the money, or if he waived his right to the profit; because with dissolution his disposal lapsed and he became a stranger to the money, resembling the agent who buys what is to be returned to him, whose agency lapsed before its return.
If the capital was in dinars and became dirhams, or was in dirhams and became dinars, it is as if it were goods as explained, with the owner's consent; otherwise returning it as it was is imposed on the worker.
When the whole capital is liquidated, liquidating the remainder is not required of the worker; because it is a partnership between them, and a partner is not required to liquidate his partner's money; he was only required to liquidate the capital so as to return the capital in its quality, and this meaning has no place in the profit. And this, in the madhhab, the sale is only imposed on him up to the amount of the capital; the sound view of the madhhab is that it is imposed on him for the whole.
If the qirad dissolves and the money is a debt, collecting it is imposed on the worker, whether profit has appeared in the money or not; because the mudaraba requires returning the capital in its quality, and debts do not behave like liquid money, so he must liquidate it, as if profit had appeared in the money, or as if the capital were in goods. It differs from the agent; because returning the money as he received it is not required of him, which is why selling the goods is not imposed on him; with no difference between the dissolution coming from the worker or from the capital owner.
If up to the amount of the capital is demanded of him, or the debt equals the profit or is less, collecting it is imposed on the worker as well; because he only deserves his share of the profit when the money arrives in a way that allows its division and each of them reaching his right from it, and that only occurs after collecting it (Al-Mughni, 5/38; Sharh al-Kabir, 5/171; Al-Mubdi', 5/32; Al-Insaf, 4/446 and 488; Kashshaf al-Qina', 3/610; Sharh Muntaha al-Iradat, 3/582 and 583).
The Malikis, on the well-known view, which is also a Hanbali view, hold that the mudaraba is among the binding contracts after work has begun, not before it begins.
The Malikis said: each of the capital owner and the worker may dissolve the qirad before work begins, that is, the purchase of goods with the money; because its contract is not binding, by consensus.
Dissolution belongs to the qirad owner alone if the worker has provisioned himself from the qirad money without leaving his town, that is, without setting out on the journey; because there is no harm to the owner in that; the harm to the capital owner lies in what was spent of his money.
The worker has no dissolution then; rather the word belongs to the capital owner, not the worker; because provisioning from the qirad money is, for the worker, work whose completion is required of him, unless he undertakes to the capital owner to guarantee the price of the provisions he bought. If the worker provisions himself from his own money, dissolution belongs to him, not to the capital owner, unless the latter pays him what was spent on provisions.
Otherwise, by working on it while resident or setting out with it on a journey, until the money is liquidated by selling the goods; neither of them then has any say in dissolving it; the money therefore remains in the worker's hand until its liquidation; and liquidation is the money's being cleared and returning as it was, and by it the work is completed; so the worker may not move the money afterwards while resident except by permission, and it is permitted on a journey until he reaches the qirad's town; except for the capital owner forbidding the worker to move it on the journey after liquidation: he may not then move it.
If one of them demands its liquidation by selling a good so the money appears, and the other demands patience for a purpose such as increased profit: the judge considers which is more beneficial, hastening or delaying for a hoped-for market and the like; if he rules for delay, he rules so; otherwise he orders its sale.
If they agree on its liquidation, it is permitted, just as if they agreed on dividing the goods by their value; if there is no lawful judge, the community of Muslims suffices, of whom two persons, or one knowledgeable person they both accept, are enough (Sharh al-Kabir with al-Dasuqi's gloss, 5/308 and 309; Tahrir al-Mukhtasar, 4/531 and 532; Sharh Mukhtasar Khalil, 6/223; Al-Taj wal-Iklil, 4/434 and 435; Mawahib al-Jalil, 7/352; Al-Bahja al-Wardiyya, 2/257; al-Sawi's gloss, 8/424 and 425).
This detail was mentioned under the ruling on whether the qirad is a binding or revocable contract, but it is repeated here for its importance.
2. When the capital owner or the worker dies. The majority of the jurists, Hanafis, Shafi'is and Hanbalis, hold that if the capital owner or the muDarib dies, the mudaraba contract is voided. As for the muDarib's death: because the mudaraba contract was concluded for him, not for anyone else, resembling agency, which the agent's death voids. As for the capital owner's death: because the mudaraba operates through authorization, and death removes authorization; and because the mudaraba is an appointment, and the death of the one who appoints voids the agency.
Whether the muDarib knows of the capital owner's death or does not is the same; because it is a legal dismissal that does not depend on knowledge, as the Hanafis stated (Bada'i' al-Sana'i', 6/112; Al-Hidaya, 3/208; Al-'Inaya Sharh al-Hidaya, 12/167; Mukhtasar al-Wiqaya, 2/192; Al-Jawhara al-Nayyira, 3/459; Al-Ikhtiyar, 3/27; Al-Lubab, 1/546; Durrar al-Hukkam, 3/487).
The Shafi'is said: if the deceased is the owner, selling and collecting the debts belong to the worker without the heir's authorization; unlike when the worker dies: his heir then owns neither selling nor collecting without the owner's authorization; because he did not consent to his disposal; if he authorizes his heirs to sell and liquidate, that is so; otherwise a trustee appointed on the judge's side takes charge.
If they want to continue the contract: if the money is liquidated, that is for both of them, by renewing a contract with its conditions; and there is no harm in its being concluded before division. Is it concluded by the wording of leaving and ratifying, the heir, or the one managing his affair, saying: 'I leave you, or ratify you, upon what you were upon'? There are two views, the sounder of which: yes; because the meaning is understood.
If the money is in goods, there are two views on ratifying his continuance on the qirad; the sounder of them is prohibition; because the first qirad was severed by death, and initiating a qirad on goods is not permitted.
His heir may not be ratified on the qirad if the money is in goods; if it is liquidated, that is for both of them by a renewed contract.
If the deceased's capital is a hundred and the profit two hundred, and the heir renews the contract with the worker in halves as it was, without division, the heir's capital is two hundred out of three hundred, and the remaining hundred belongs to the worker; at the sharing he takes it and its share of the profit; and the heir takes his capital of two hundred, and they divide what remains (Al-Bayan, 7/227 and 229; Rawdat al-Talibin, 3/762 and 763; Mughni al-Muhtaj, 3/357; Nihayat al-Muhtaj, 5/272 and 273; Al-Najm al-Wahaj, 5/281).
The Hanbalis said: if the deceased, or the insane and the like, is the worker, and the capital owner wants to initiate the qirad with the worker's heir, or with his guardian if the heir cannot dispose, and the money is liquidated, it is permitted, since there is no impediment; the capital handed over by the deceased plus his share of the profit constitutes capital; and the labor's share of the profit is an undivided partnership for him; and this sharing does not prevent the contract's validity; because the partner is the worker, and that does not prevent disposal.
If the money is in goods and the heir wants, together with the worker, to complete it, the qirad cannot be imposed on them; because the qirad was voided by death; the goods are handed to the judge, who sells them and divides the profit according to what they stipulated at the initiation of the mudaraba; and neither of them sells it without the other's authorization, due to their sharing in it.
The apparent meaning of Ahmad's statement is its permissibility; because he said, in 'Ali ibn Sa'id's narration: when the capital owner dies, it is not permitted for the worker to sell or buy without the heirs' authorization; the apparent meaning of this is that the worker remains on his qirad; because this is completing the qirad, not initiating it; and the qirad is only prevented over goods because settlement requires returning their like or dividing them, which varies with the times, and that is not present here; because the capital is not the goods and its ruling persists: does one not see that the worker may sell it, so as to hand over the capital and divide the remainder? The first view is more apt by analogy; because if the money were liquidated it would be initiating a qirad, and the worker's share of the profit would be an undivided partnership belonging to him alone; and if the money were liquidated at a loss or with loss of part, the capital at the qirad's initiation would be what exists of it; if we permitted initiating the qirad here and they built upon it, the worker's share of the profit would no longer be exclusively his, their share of the profit would be shared between them, and the goods would be counted against him above their value in case the money was diminished; and that is not permitted in the qirad, without disagreement; so Ahmad's statement is carried to his selling and buying with the heirs' authorization, like his selling and buying after the qirad's dissolution.
Selling the goods and collecting the debts belong to the worker.
If the deceased, or the insane and the like, is the worker, and the capital owner wants to initiate the qirad with his heir or guardian: if it is liquidated, it is permitted, as we said regarding the capital owner's death; if it is goods, initiating the qirad is not permitted except by the route that permits initiating a qirad over goods: that the goods be appraised and the capital be their value on the day of the contract; because the one who worked on it has died or gone insane and his labor is gone, with no original for his heir to build upon; unlike the capital owner's death: the qirad money exists and its benefits exist, so the contract's continuation is possible and the heir may build upon it.
On the first view, the goods are handed to the judge, who sells them and divides the profit according to what they stipulated at the initiation of the mudaraba; and neither of them sells it without the other's authorization, due to their sharing in it (Al-Mughni, 5/39; Kashshaf al-Qina', 3/611 and 612; Sharh Muntaha al-Iradat, 3/584).
The Malikis said: the qirad contract does not dissolve by the worker's death; its not dissolving is to avoid the lesser of two harms: the heirs' harm in dissolution, and his owner's harm in keeping it with them; and there is no doubt that the heirs' harm through dissolution is greater, since their right to their deceased's labor is lost.
If the worker dies before the money is liquidated and he has a trustworthy heir, even if less trustworthy than their deceased, he completes it according to the ruling of what his deceased was upon; if he is not trustworthy, he must bring one who is trustworthy, like the deceased in honesty and reliability; if he finds no trustworthy person, the heirs hand the money over to its owner with nothing, that is, without any profit or wage; because the qirad's work is like a ju'ala: the worker deserves nothing in it without completing the work.
This is if the worker dies after work has begun; if he dies before working in it, the money belongs to its owner.
If the capital owner dies before the qirad holder works on it and makes it specific, and the heirs or the executor prefer to take the money, it is theirs; and if they prefer to ratify him on his qirad, they may not seize the money if he has begun working and trading with it; and even if he provisioned food or clothing for his journey from it, then the capital owner dies and the heirs want to return the qirad, they take the provisions as they are and do not guarantee him their diminution.
If the capital owner dies while the worker is in the capital owner's town and the money is in his hand as an object, then the worker moves the money after the capital owner's death and his knowledge of his death: he is liable for his transgression; because the money passed to the heirs upon death; if the money was in goods and he moved it, there is no guarantee against him; and the heirs may not prevent him from disposing of it; they are in that like their deceased; likewise there is no guarantee against him if he trades before knowing of his death.
Likewise there is no guarantee if the worker is not in the capital owner's town, even if the absence is near; and a near absence should be treated like presence. If he disposes of it after learning of his death, he guarantees, whether he trades for himself or for the qirad; the profit is his if he trades for himself, otherwise not; if he trades with it before learning of the death and loses, he guarantees for his mistake against the heir's money. It is said: he does not guarantee; because he has an excuse; and this is the relied-upon view (Al-Mudawwana al-Kubra, 12/130; Al-Kafi, p. 386; Al-Istidhkar, 7/27; Sharh al-Kabir with al-Dasuqi's gloss, 5/309; Tahrir al-Mukhtasar, 4/532; Sharh Mukhtasar Khalil, 6/213 and 223; Al-Taj wal-Iklil, 4/435; Mawahib al-Jalil, 7/352).
The shaykh of Islam Ibn Taymiyya (may Allah have mercy on him) was asked about a man who handed over money as a mudaraba and died, and the worker worked with it after his death without the heirs' authorization: does the mudaraba dissolve? And what is the ruling on the profit after the owner's death?
He answered: yes, the mudaraba dissolves after the owner's death; then, if the worker learns of his death and disposes without the owner's authorization, verbal or customary, and without legal guardianship, he is an usurper.
The scholars differed over the profit obtained in this case: is it for the owner alone, like the growth of objects; or for the worker alone, because the guarantee is upon him; or do the two give it in charity, because it is an ill-begotten profit; or is it between the two? Four views.
The soundest of them is the fourth: that the profit is between the two of them, as custom runs in such a case; thus ruled the Commander of the Believers Umar ibn al-Khattab (may Allah be pleased with him) concerning what his sons took from the public treasury's money and traded with without entitlement: he made it a mudaraba; and the jurists relied upon that in the chapter on mudaraba; because the profit is growth resulting from this one's bodily effort and that one's money, so it is between them, like all growth arising from two origins; and the right does not exceed them; and there is no ground for forbidding it to the two of them, nor for setting it apart for one of them.
Requiring a share like that of the profit is sounder than the view of whoever requires the wage of the like; because the money may not profit at all, and its wage may be several times its profit, or the reverse; and the aim of these partnerships is not labor such that a wage is owed in it; nor is it a hire contract; it is an independent origin, a kind of partnerships, not of hires, so that what is void in them is void in it; whoever imposes in it what is not imposed in it has erred.
If there passed between the worker and the heirs speech which, by custom, implies keeping the mudaraba contract in place, the one for whom a share was named deserves his share of the profit, and that is an earned mudaraba; and when he acknowledges the profit, what he acknowledged is binding upon him; if he then claims an error not excusable in such a case, his word is not accepted.
If it is excusable in such a case, its acceptance is a famous disagreement; and he may not hand the money over to another without the capital owner's permission, or the Law's.
Whenever he does so he is liable for the money, whether he handed it over by a valid contract or by a corrupt contract: what is guaranteed by the valid contract is guaranteed by the corrupt one, and what is not guaranteed by the valid one is not guaranteed by the corrupt one.
As for if the money was taken by force, he is liable in every case; and whenever the worker is negligent with the money or transgresses, its guarantee is upon him; likewise the second worker if he denies the right, or conceals money due from him, or demands from them a hire without lawful justification: he sins thereby; and it is the authority's duty to deliver rights to those entitled to them; and Allah knows best (Majmu' al-Fatawa, 30/87 and 88).
The Hanafis said: if the muDarib dies and the mudaraba money is not found among what he left behind, it reverts to being a debt within what the muDarib left behind; and likewise the depositary, the borrower, the one who takes a guaranteed deposit, and everyone who had money in his hand as a trust, if he dies before explaining; the trust not being identified, it becomes a debt in his estate; because he has become, through failure to explain, a consumer of the deposit, and his estate is not believed regarding its loss and its delivery to the capital owner.
If the deceased designated the money during his lifetime, or that is known, it remains a trust in his executor's hand or in his heir's hand, as it was in his hand; and they are believed regarding its loss and delivery to its owner, as the deceased was believed during his lifetime (Bada'i' al-Sana'i', 6/115; Ibn 'Abidin, 8/351; Ibn 'Abidin transmitted: trusts only become guaranteed through death, when not explained, in three issues: the administrator of religious endowments, if he dies without knowing the state of its revenues and without explaining, no guarantee is upon him; when the ruler sets out for war and spoils are taken and part of the spoils is deposited with some of the takers, and he dies without explaining with whom he deposited, no guarantee is upon him; and one of two fully authorized partners, if he dies with the partnership's money in his hand).
The Malikis said: one who dies holding a qirad, or a deposit, or merchandise: if it is found in his estate as it is and established, it is taken as it is; if it is not found in his estate as it is, and he left no will, and it is not known that he returned it to its owner, and he claims no loss or ground of exoneration: the like or the value is taken from his estate; because he may have spent it or it may have been lost through his negligence, after the capital owner has sworn that it did not reach him and that he took nothing from it; and this is so long as the matter has not become long past, like ten years; then he is made to return it to its owner as with the deposit, and his owner's claim that it survives is not accepted.
If his heir claims the deceased returned it, or that it perished by a heavenly calamity or without negligence: al-'Awfi said: prior to his word; and Abu 'Ali said: this is an error; the heir's mere word as mentioned is not accepted, as is the apparent of the view.
The owner of the qirad, the merchandise and the deposit shares with the creditors over the money left by the deceased.
If he bequeathed, or acknowledged in his illness or health, a qirad for Zayd, or a deposit: it is taken as it is and given precedence over the acknowledger's creditors, whether or not there is proof of the origin of that qirad or deposit, so long as he was not insolvent; if he was insolvent, his designation of the qirad and deposit is not accepted unless proof of its origin stands, whether he was sick or healthy (Sharh al-Kabir with al-Dasuqi's gloss, 5/313 and 314; Al-Dhakhira, 6/58; Tahrir al-Mukhtasar, 4/534 and 535; Sharh Mukhtasar Khalil, 6/226; Al-Taj wal-Iklil, 4/437 and 438; al-Sawi's gloss, 8/432).
The Shafi'is said: if the worker dies without the qirad money being distinguished from other money, he is like one who dies holding a deposit without identifying it; and there, if the deposit is not found as it is, there are three cases: the first, that its loss without negligence is known, either by the deceased's bequest or by testimony witnessing to it: no guarantee in the deceased's estate; if the owner denies the deceased in his bequest regarding its loss, he makes the heirs swear and they are absolved. The second case: that it is known to have perished through his negligence and transgression, either by a bequest or by testimony witnessing that for him: it is guaranteed from his money, and the owner shares with it all the creditors. The third case: that its state is unknown: al-Shafi'i said the deposit's owner shares with the creditors. Al-Mawardi (may Allah have mercy on him) said: our companions differed over that into four schools: one of them, which is the apparent meaning of al-Shafi'i's statement: it is guaranteed in the deceased's estate; and this is Abu Hanifa's view; because the apparent of his hand being established over it is that it perished by his act. The second school: that it is not guaranteed in his estate; and this is Ibn Abi Layla's view; because the origin is his remaining upon trust. The third school: if something of its kind is found in his estate, it is guaranteed from it; if nothing of its kind is found in his estate, he does not guarantee; and this is Abu Hamid al-Marwazi's view; because the apparent of its kind's existence is that it is in it or from it. The fourth school: if he mentioned in his bequest at his death that he had a deposit, it is guaranteed in his estate; if he did not mention that, he does not guarantee; because one only bequeaths a deposit while it is in his hand or upon him. Then, when it has become guaranteed in his estate according to these views: if there is nothing of its kind in the estate, the deposit's owner shares with it all the creditors; if there is something of its kind in the estate, there are two views: one, that it is given precedence over the creditors, considering the appearance of the kind that it is from it; the other view: that it rank equal with them without precedence, considering certainty in sharing (Al-Hawi al-Kabir, 8/380; Rawdat al-Talibin, 3/768; Al-Bayan, 8/432).
Al-Damiri (may Allah have mercy on him) said: the worker died and we did not find the qirad money as it is in his estate: Ibn al-Salah ruled, in agreement with the authors of the Bayan and the Shamil, that he guarantees; and there is no doubt that he is more fitting to guarantee than the depositary; because the depositary may not dispose of the deposit, unlike the qirad; and al-Khuwarizmi explicitly stated the opposite of what Ibn al-Salah and others said. And the Shaykh said: if there is found in the estate what he may have bought with the qirad money, the qirad is paid from it in precedence over the debts; and if nothing bearing it is found, there is no guarantee, and the estate is exclusive to the creditors and heirs; and the two issues are extremely problematic, because of the conflict between the trust, the obligation of payment and absolution of liability, and the survival of the money (Al-Najm al-Wahaj, 5/286 and 287).
The Hanbalis said: if the muDarib dies suddenly or otherwise, and the mudaraba money is not identified, because of the worker's not specifying the money, and its survival is unknown, it is a debt in the worker's estate for its owner, equal with the creditors; because the origin is the money's remaining in the deceased's hand, mixed with the whole estate, with no way of knowing its object, so it became a debt; and because there is no way of extinguishing the money owner's right, nor of giving him an object from the estate; because it may not be his money's object; so only its attachment to liability remains; and likewise the deposit if the depositor dies and its survival is unknown.
Like it is one who dies having bequeathed, and the survival of his legatee's money is unknown: it is a debt in his estate.
Ahmad (may Allah have mercy on him) said: it is only a debt in his estate if he dies not suddenly (Al-Mughni, 5/37; Al-Mubdi', 5/34; Al-Insaf, 5/451; Kashshaf al-Qina', 3/611).
The Shafi'is state that if a man hands another man money and says: 'when I die, dispose of it after my death, by selling and buying, as a qirad, with half the profit for you', then he dies, it is not valid and he may not dispose of it after his death; because it is a suspension; and because the qirad is voided by his death even if it were valid; unlike if he bequeathed him the benefit of an object; because that is a valid suspension (Rawdat al-Talibin, 3/768; Mughni al-Muhtaj, 3/361).
3. The insanity of one of the two contracting parties. The majority of the jurists, Hanafis, Shafi'is and Hanbalis, hold that the mudaraba is voided by one of them going insane, if it is total insanity; because it voids the capacity to command in the one commanding and the capacity to dispose in the one commanded; likewise fainting, on the sound view among the Shafi'is. It is said: fainting does not effect dismissal nor strip guardianships (Bada'i' al-Sana'i', 6/112; Rawdat al-Talibin, 3/763; Mughni al-Muhtaj, 3/357; Nihayat al-Muhtaj, 5/272 and 273; Al-Najm al-Wahaj, 5/281; Al-Mughni, 5/38; Kashshaf al-Qina', 3/611).
If the muDarib is the apostate, the mudaraba remains as it is according to all of them; if the muDarib dies, is killed, joins the war territory or is ruled to have joined it, the mudaraba is voided; because these things are like death. As for the woman, her apostasy or otherwise is the same by consensus, whether she is the money's owner or the mudaraba's worker; except that if she dies, or joins the war territory and is ruled to have joined it: because her apostasy has no effect on her property, likewise it has no effect on her disposal (Bada'i' al-Sana'i', 6/112; Al-Hidaya, 3/208; Al-Ikhtiyar, 3/27; Al-Jawhara al-Nayyira, 3/459 and 460; Al-Lubab, 1/546).
6. The mudaraba money either perishes entirely or partly; and likewise it either perishes before anything is bought with it or after the purchase; and each has its ruling.
The Hanafis said: the mudaraba is voided by the mudaraba money perishing in the muDarib's hand before he buys anything with it; because it became the mudaraba contract's specified object upon receipt, and the contract is voided by its perishing, like the deposit.
Likewise if he consumes it, spends it, or hands it to another who consumes it, for what we said, so that he may not buy anything with it for the mudaraba.
This is if the mudaraba money perishes before the muDarib buys anything; if it perishes after the purchase, such as the mudaraba money being a thousand and he buys a slave-girl with it and has not paid the seller the price until the thousand perishes: the slave-girl remains on the mudaraba, and he is liable to the capital owner for the thousand, which he hands to the seller; likewise if the second thousand he received perishes, he is liable to the capital owner for its like; and so the third and the fourth and everything after, forever, until he hands it to the seller; and what the capital owner paid first, and all that was incurred, is counted from the capital. That is because the muDarib disposes for the capital owner: he is liable for what befalls him of guarantee through his disposal for him, like the agent; the difference between the agent and the muDarib being that if the price perishes in the agent's hand and he is liable to the principal for its like, then the second perishes, he is not liable to the principal; while the muDarib is liable each time; the reason for the difference being that the agency ended with the agent's purchase; because the aim of the purchase agency is acquiring ownership of the sold item, not profit: once he bought, the aim was achieved and the agency contract ended with its end, and the price became the agent's liability to the seller; if it perished in his hand before the seller received it, the like of what the seller is owed from him becomes the agent's liability to the principal; once he receives it once he has recovered his right and nothing else is owed to him. As for the mudaraba, it does not end with purchase; because its aim is profit, which is only obtained by repeated selling and buying; the contract remaining, he may return a second and third time; and everything the capital owner incurred with the first becomes capital; because it was incurred for the capital owner because of the mudaraba, so all of it is of the mudaraba money; and because the aim of this contract is profit: if what the capital owner incurred of the capital were not considered and it perished for nothing, the capital owner would be wronged, losing while the muDarib gains, and that is not permitted.
If the muDarib received the first thousand and disposed of it until it became two thousand, then bought with it a slave-girl worth two thousand and the two thousand perished before the seller received them: he is liable to the capital owner for a thousand five hundred, and the muDarib bears from his own money five hundred, which is his share of the profit: so a quarter of the slave-girl is the muDarib's alone, and three-quarters of it on the mudaraba (Bada'i' al-Sana'i', 6/113).
The Malikis said: if all the mudaraba money perishes from the worker's hand, the contract dissolves.
If part of the money perishes in the worker's hand before the work or after it, or he loses it, or thieves or the swindler take it unjustly, or it perishes by a heavenly calamity, the worker does not guarantee it and the qirad remains over what remains, on the well-known view, with compensation from what the money's principal earned: what remains after the first capital is completed is between them according to their stipulation (as for loss through a wrong, the profit does not compensate; because it follows the wrongdoer, whether the wrongdoer is a stranger or the worker himself, and whether the wrong occurs before the work or after it).
If the worker said to the capital owner: 'I will not work until you make what remains the capital', and he did so and they waived the loss, he remains forever on the first qirad; and if he reckoned with him and brought him what he had not received from his owner after the loss and damage, then returns it to him in soundness and innocence, he is not afterwards compensated by profit; because it is, after his owner's receipt, another begun qirad, on the well-known view; and it is known that compensation only occurs if something of the money remains: if all of it perishes and its owner brings its replacement and the other profits, his first profit is not compensated; because it is a second qirad; and this is apparent.
Ibn Habib transmitted from Malik and others of his companions whom he met: if he informs him of the diminution and says: 'work with what remains, and I have waived from you the qirad of what is gone', it is a begun qirad.
If the capital owner hands the money to the worker and the worker buys a commodity and then the money is lost: the capital owner chooses between replacing it, that is, paying the worker the replacement of what perished so he may trade with it, or not replacing it; whether part or all perished, and whether the loss occurred before the work or after it; if the capital owner replaces it, the worker must accept if part perished, not if all of it did when the loss occurred after the work; if it occurred before the work, it is not required of him; because each of them has dissolution before the work.
In the loss of the whole, the second is a begun qirad and the first's loss is not compensated by the second; in the loss of part, the first capital remains, and the first's loss is compensated by the second.
If the worker buys a commodity for the qirad and then goes to deliver its price to its seller and finds the money lost, and the capital owner refuses to replace it: the commodity he bought falls upon the worker if the whole perished, the capital owner not having replaced what perished; or if he replaced it and the worker refused to accept it: the commodity's profit and its loss are his. If the capital owner replaces what perished and the worker accepts: it is on the qirad.
If he bought with all the money a commodity and part of the money perished before its receipt and after the purchase, and the capital owner did not replace what perished and the worker replaced it: the profit is surplus over what the worker paid of the commodity's price and what was paid into it of capital; what replaces what was paid into it of capital compensates the loss; the surplus, if any, is between them according to their stipulation; and what replaces what the worker paid he reserves exclusively for himself (Sharh al-Kabir with al-Dasuqi's gloss, 5/299 and 300; Tahrir al-Mukhtasar, 4/522 and 523; Sharh Mukhtasar Khalil, 6/216; Al-Taj wal-Iklil, 4/427 and 428; Minah al-Jalil, 7/356; al-Sawi's gloss with the Sharh al-Saghir, 8/418 and 419).
The Shafi'is said: the diminution occurring in the qirad money through selling at a loss, or a defect, or an illness newly arisen, is counted from the profit as far as it can be computed; and that diminution is compensated by the profit, custom requiring that.
Likewise if part of the qirad money perishes by a heavenly calamity like fire or drowning, or by usurpation or theft, and it is impossible to recover it or its replacement after the worker's disposal over it by selling or buying: it is counted from the profit on the soundest view; because it is a diminution that occurred in the money, so it is compensated by the profit like the diminution occurring through selling at a loss, by analogy with the foregoing; because the worker only deserves from the surplus over the capital. The other view, which is opposite the soundest: no; because it is a diminution unconnected to the worker's disposal and trade, unlike what occurs through selling at a loss; and it does not arise from the money's essence, unlike illness and defect. And what he mentioned of usurpation and theft is in the case where recovering the perished item's replacement is impossible: if he recovers it, the qirad continues over it as it was; the claimant is the owner alone if there is no profit in the money, and the two of them together if there is profit.
It is said: the worker may litigate unconditionally, to safeguard the money.
If part of the money perishes as mentioned before his disposal over it by selling or buying, what perishes is counted from the capital, not from the profit, on the soundest view; because the contract was not confirmed by work. The other view: from the profit; because upon the worker's receipt it became qirad money.
All of this is if part of it perishes; if all of it perishes: the qirad lapses, whether it perished by a heavenly calamity, or by the owner's, worker's or stranger's destruction; but the worker's share of the second's profit remains established, as mentioned; and the qirad remains in the replacement if he receives it, according to the fourth; and the withholding is upon the replacement against the owner if there is no profit in the money, and against the owner and worker if there is profit.
As for if the worker destroys it: it is said the qirad lapses; because its replacement, even if owed by him, only enters the owner's ownership upon his receipt from him, requiring then the qirad's renewal. It is said: it does not lapse; because the replacement stands in its place.
If a qirad's money with which he bought something perishes before its delivery, the sale and the qirad dissolve; if it perished in liability and before the purchase, the purchase reverts to the worker and the qirad lapses; if it perishes after the purchase, it falls to the owner: if the money was a hundred and it perished, another hundred is required of him (Rawdat al-Talibin, 3/758 and 760; Mughni al-Muhtaj, 3/356; Nihayat al-Muhtaj, 5/271 and 272; Al-Najm al-Wahaj, 5/279 and 280; Al-Dibaj, 2/438 and 439).
The Hanbalis said: if the capital perishes, wholly or partly, after his disposal over it, or the capital becomes defective, or suffers loss, or the price falls after the worker's disposal over the capital, the loss is compensated from the remainder's profit before its division, whether it is liquidated or its liquidation occurs with accounting; because it is one mudaraba, and the worker has nothing until the capital is complete.
If part of the capital perishes before the worker's disposal over it, the mudaraba dissolves for it, and the capital is the remainder alone; because it is money that perished before disposal, like what perishes before receipt; and it differs from what comes after disposal; because it turned in trade and engaged in what the contract intended of dispositions leading to profit.
If the money perishes before disposal and then the muDarib buys a commodity on his own liability for the mudaraba, it is his, that is, the muDarib's, and its price upon him; whether he knew of the money's loss before paying the price or did not; because he bought it on his own liability and it is not of the mudaraba, because of its dissolution by the loss, so it became exclusively his; if it had been for the mudaraba he would have been borrowing against another, and borrowing against another without his permission is not permitted, unless the capital owner approves it: then it is like one who buys a commodity on his own liability for another without naming him.
If the mudaraba money perishes after the purchase, before the commodity's price is received, because he bought on his own liability for the mudaraba a commodity, then the mudaraba money perishes before his receipt, or he and the commodity perish: the mudaraba remains as it is; because the cause of its dissolution is the perishing, which did not exist at the time of the purchase or before it; and the price is upon the capital owner; because the contract's rights are attached to him, like the principal; and the commodity's seller may demand the price from the capital owner and the worker; because the owner's authorization persists and the worker's direct involvement; if the capital owner guarantees it, no one bears anything; because the contract's rights are attached to him; and the worker recovers through him if he guarantees it to the capital owner, as mentioned.
If the capital is a hundred and he loses ten, then its owner takes ten, the capital is not diminished by the loss; because he may profit and the loss is compensated from the profit; but the capital is diminished by what the capital owner took, which is the ten, plus their share of the loss, which is one dirham and one ninth; so the capital remains eighty-eight dirhams and eight ninths.
If the capital owner took half of the ninety remaining, which is forty-five, the capital remains fifty dirhams; because the capital owner took half the money, so half the loss lapsed. If he takes fifty, there remains forty-four and four ninths; because he took five ninths of the money, so five ninths of the loss lapsed, which is five and five ninths, leaving what was mentioned.
Likewise if the money profits and the capital owner takes part of it: what the capital owner took is of the profit and the capital; if the capital is a hundred and it profits twenty and its owner takes them, he has taken a sixth of the whole: the money, which is a hundred, loses a sixth of it, sixteen and two-thirds, and its share of the profit is three and a third; so the capital becomes eighty-three and a third. If he took sixty of it, the capital would become fifty; because he took half the money and so becomes half. If he takes fifty of it, fifty-eight and a third remains; because he took a quarter of the money and a sixth of it, so its third and its quarter remain.
As long as the contract remains over the capital, compensating its loss from its profit is obligatory, even if they divided the profit; because it is one mudaraba: division of the profit is forbidden and the contract remains, except by their agreement on its division; because of the capital owner's inability to safeguard his capital, fearing loss which would be compensated by the profit; and the worker's inability, not being able to rule out being required to return what he took at a time when he is unable: so neither of them is compensated. Imam Ahmad said, asked about the muDarib who profits and loses repeatedly: the loss is charged to the profit, unless its owner receives the capital and then returns it to him saying: 'work with it a second time'; what is profited afterwards does not compensate the first's loss; because it is another mudaraba. He said: 'this, I have nothing settled in my mind about it.' As for what is not handed over to him, whenever they keep accounts, the accounting is like receipt, as Ibn Sirin said. It was said: how can accounting be like receipt? He said: 'the money appears, meaning it is liquidated and arrives, and they account upon it, and if its owner wishes he takes it.' The Imam was told: do they account upon the goods? He said: 'they only account upon the liquid; because goods may fall in price or rise.' End of quotation.