Mudarabah
/ˌmuːdəˈrɑːbɑː/
Definitions
- (n.) An Islamic finance contract where one party provides capital to another who manages a business venture, sharing profits according to a pre-agreed ratio, with losses borne by the capital provider.
The entrepreneur secured funding through a mudarabah agreement to start her halal food business.
Forms
- mudarabah
Related terms
See also
Commentary
Mudarabah is fundamental in Islamic banking, emphasizing risk-sharing and prohibition of interest; clarity in profit-sharing ratios is essential in drafting.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.