Explanation of Article 550
The article addressed the definition of the Mudaraba contract, which is a contract where the capital owner hands over money to someone who works with it for a common share of the profit from that money. It is derived from this that the Mudaraba contract is a commutative contract binding on both parties. The capital is provided in this contract by the capital owner, and the work is provided by the Mudarib, with the profit distributed between them according to an agreed-upon ratio.
The article's definition reveals the elements that constitute the Mudaraba contract, which are:
The first element: Capital; it is the obligation of the capital owner, and it may be in the form of money, which is the most common, or it may be in non-monetary form, in which case its value is considered the capital as will be explained. The capital must meet the general conditions for the subject matter of the contract as stipulated in Article (72).
The second element: Work; it is the obligation of the Mudarib to work with the money to achieve profit from it, and it may be unrestricted or restricted as will be explained. This distinguishes the Mudaraba contract from other contracts that may resemble it, where money is handed over, such as loans, where the purpose is for the borrower to benefit from the money; leases, where the purpose is for the lessee to benefit from the leased item; lending, where the purpose is for the borrower to benefit from the borrowed item; and deposits, where the purpose is to safeguard the deposit, among others.
The third element: Profit; profit is a pillar in the Mudaraba contract, and it is subject to the general conditions for the subject matter previously stated in the first section, including that it must be specified or specifiable as stipulated in Article (72). If the contracting parties agree that one of them does not deserve a share of the profit, it is not Mudaraba. However, if they contract on profit without specifying each party's share, the contract is valid because it is specifiable according to custom, as will be explained. According to the article, what the contracting party deserves from the profit must be common, meaning a percentage of it, not a fixed amount. If the contracting party stipulates a specific non-common amount of profit, this condition is void, as will be explained when explaining Article (559).
Related To
Article 550
Mudaraba is a contract under which a capital owner places a property in the custody of a mudaraba agent to invest it in a business activity against a common share of the profit.