Explanation of Article 558
After Article (557) clarified the provisions of bearing loss in speculation; the three articles (558-560) came to explain the provisions of profit division between the contracting parties in speculation; this article established the general principle in profit division as follows:
First: The profit division between the contracting parties in the speculation contract is according to the agreement; whether the agreement was at the conclusion of the speculation contract or in a subsequent agreement, and whether it was explicit or implicit; for example, if the dealings between them are conducted on speculation in goods with a sharing ratio between them, and then the dealings continue in the same manner, this is considered an implicit agreement on the same ratio.
Second: In the absence of an agreement on determining the contractor's share of the profit; the speculation is also valid, and each contractor's share is determined according to custom; this is merely an interpretation of the contractors' intent when they remain silent about determining each contractor's share; the system assumed that the contractors' intent was directed towards custom, and thus the profit division between them is according to custom. Nevertheless, the system grants each contractor in this case the right to withdraw from the speculation even if it is for a specified period, provided the conditions for withdrawal in unspecified period speculation are met, which are outlined in paragraph (1) of Article (562); due to the nature of the speculation contract and its continuous nature, the contractor may not wish to continue if it becomes apparent that the custom in profit sharing is contrary to what was expected. These conditions are:
The first condition: The contractor wishing to withdraw must inform the other contractor of his desire to withdraw a reasonable time before it occurs.
The second condition: The withdrawal must not be in bad faith; the withdrawing contractor must be in good faith in his withdrawal, so as not to misuse his right to withdraw.
The third condition: The withdrawal must not be at an inappropriate time, such as if the speculation is in purchasing stationery and selling it, and then he withdraws just before the start of the school year, or if it is in purchasing livestock to sell during the sacrificial season and then withdraws just before the season.
The appropriateness of the timing is to be determined by the court.
Related To
Article 558
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The profit share of each contracting party shall be determined by agreement.
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If no agreement is made to determine the profit share of each contracting party, such share shall be determined according to custom. In such case, a contracting party may terminate the mudaraba contract in accordance with Article 562(1) of this Law.