On Muḍārabah

Mufti:

Alsayyed Muhammad b. Abdallah Awad Al-Muayyady

تاريخ النشر: February 16, 2026

Fatwa number: 21781

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On Muḍārabah

Fatwa number: 21781

Question: A man handed money to another to trade with—buying and selling—on the basis of muḍārabah between them. He sold and bought for cash and on credit. One of his clients went bankrupt, so he took from him a promissory note for that debt. When the owner of the capital learned of it, he demanded that money from the muḍārib (working partner) and claimed against him that he had lent it to him; the muḍārib denied this. What is the ruling? And what is required of the muḍārib?

Answer—and Allah is the One who grants success: If the muḍārabah is unrestricted, it is permissible for the muḍārib to sell and buy for cash and on credit—except with one who is not reliable; it is not permissible for him to transact with such a person on credit. This is what the unqualified wording of the muḍārabah contract entails.
On that basis, the muḍārib is not liable for what he is unable to recover of the debt encompassed by the muḍārabah contract, because—as we mentioned—the unqualified wording of the muḍārabah contract includes permission to buy and sell for cash and on credit.
If the owner claims that the muḍārib loaned out the money as a loan, and the muḍārib denies it, then the burden of proof is upon the claimant, and the one who denies must swear an oath.
Source: Min Thimār al-ʿIlm wa al-Ḥikmah vol.2