Explanation of Article 553
The Mudarabah contract entails that the Mudarib has the right to manage and dispose of the funds; thus, his actions regarding the funds, as long as they are within the limits of the Mudarabah contract, are valid and effective concerning the capital owner. The article outlines several obligations that the Mudarib must adhere to in managing and disposing of the funds, as stipulated in the referred articles:
According to Article (539), the Mudarib is obligated to exercise the care he would in his personal affairs, without falling below the care of an ordinary person. He is not allowed to act in a way that harms the capital owner or contravenes the powers granted to him or the purpose for which the Mudarabah was contracted.
According to Article (540), the Mudarib is not permitted to gift or lend any part of the Mudarabah funds unless authorized by the capital owner.
According to Article (51), the Mudarib is not entitled to withhold any of the Mudarabah funds for himself or use them for his own benefit, otherwise, he would be liable to compensate the capital owner for any damage resulting from this. If the Mudarib pays from his own funds for the Mudarabah or incurs beneficial expenses due to urgency, which are not required by the Mudarabah contract, he has the right to recover what he paid or spent.
The Mudarib is bound in all of this, in his management and disposal of the funds, by what the Mudarabah contract requires, and by the terms and conditions agreed upon in the contract, explicitly or implicitly; including what is customary in Mudarabah contracts for similar activities.
It is noteworthy that the obligations and provisions contained in these articles originate from the contract; thus, the contracting parties may agree otherwise by increasing or decreasing the Mudarib's responsibility, as long as it does not contravene the mandatory rules stipulated by the system.
Based on what the article has determined, the Mudarib's obligation under the Mudarabah contract is an obligation of care, not of achieving a result; he is not liable if the expected profit is not achieved, nor is he liable if the funds are lost, as long as he has exercised the care required by the system.
It should be noted that the Mudarib's management and disposal of the funds are in his personal capacity before third parties, as the Mudarabah company does not acquire a legal personality, and the obligations arising from contracting with third parties are his responsibility, not that of the capital owner.
Related To
Article 553
A mudaraba agent shall, upon receipt of the mudaraba capital, have the right to manage and dispose of such capital, in accordance with the provisions of Articles 539, 540, and 541 of this Law and subject to the mudaraba contract concluded between him and the capital owner.