Mudarabah Agreement Sample

Ondřej Havlín 11.4.2021
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If the Mudarabah agreement becomes fasid for any reason, the status of the Mudarib will be as a collaborator, which means that the Mudarabah will be terminated when the deadline set in the contract expires. It can also be terminated at any time by one of the two parties by notification. If Rab-ul-Maal has resigned from his service in Mudarib, he will continue to act as Mudarib until he is informed and all his actions will be part of Mudarabah. The Mudarib-Rab-ul-Maal cannot award a lump sum of the profit to a party, nor can they determine a party`s share at a specified rate linked to the capital. For example, if the capital is Rs.-Rs, they cannot agree on a condition that 10,000% of the profits be Mudarib`s share, nor can they say that 20% of the capital must be given to Rab-ul-Maal. However, they can agree that 40% of the actual profit will go to Mudarib and 60% to Rab-ul-Maal or vice versa, if all Mudarabah assets are in cash at the time of termination and a portion of the profit has been realized on the principal amount, it will be distributed according to the relationship agreed between the parties. However, if Mudarabah`s assets are not in cash, they are sold and liquidated, which determines the actual profit. All mudarabah loans and debts will be recovered. The provisional profit made by Mudarib and Rab-ul-Maal is also taken into account and, when the total capital is drawn, the amount of capital invested by Rab-ul-Maal is given to it, the balance being called profit distributed between Mudarib and Rab-ul-Maal in the agreed proportion. If there is no balance, Mudarib will have nothing. If the principal amount is not recovered in full, the profit shared by Mudarib and Rab-ulMaal during Mudarabah`s term of office will be withdrawn to pay the principal amount to Rab-ul-Maal. The rest will be the profit that will be distributed between Mudarib and Rab-ulMaal. Even in this case, if there is no balance, Mudarib will get nothing It is also permissible to agree on different proportions in different situations.

For example, Rab-ul-Maal can say to Mudarib: „If you deal with wheat, you get 50% of the profits and if you deal with flour, you have 33% of the profit.“ Similarly, he can say: „If you do the trick in your city, you will be entitled to 30% of the profits and if you do it in another city, your share will be 50% of the profits.“ Source: Dr Muhammad Imran Ashraf Usmani, Meezan Bank Guide to Islamic Banking. This benefit is shared in the agreed report (agreed in advance). Mudaraba contracts can also be used as a source of money for an Islamic bank. In Mudarabah, Rab-ul-maal offers investment and mudarib management so the Rab-ul-maal should hand over the agreed investment to Mudarib and leave all Mudarib without interference on its side, but it has authority: Faleel Jamaldeen, DBA, is the founder and publisher of the site of the Islamic financial expert ( He is an assistant at Effat University in Didda, Saudi Arabia, where he teaches courses in conventional finance, Islamic finance and accounting. These modes can be used in the following areas (or can replace them according to Sharia rules). One between the Islamic bank that serves the investor (rab al mal) and the project client as a work partner (mudarib): this contract indicates that both parties will share the profits on a 70:30 basis (with 70 percent for the Islamic bank and 30 percent for the customer).

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