Terminating a mudhaarabah contract
Question
In a business investment, if a person invests his money (let say 100%) and another person invests his efforts and they share the profits as per mutual agreement, then I wonder how this business deal ends in the case where the investor wants to withdraw from the business.
Does he take back everything as he invested 100%, and in general should the person who wants to take up the business have to pay the prinicipal amount invested by the investing person for him to stay away from the business (with a mutual deal)?
Answer
If you are talking about mudharabah where one partner does the financing and the other does the work then at the point that they terminate they should see what was the arrangement. If the arrangement was that both take 50 percent of the profits then the investor will take 50 percent of the profit as well as whatever remains of the principal amount and the working partner will take the other 50 percent of the profits provided there were no losses incurred.
And Allah Ta'ala (الله تعالى) knows best.
- Answered by
- Mufti Ebrahim Salejee (Isipingo Beach)
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