Unclear agreement of Mudhaarabah
26-1-2011 | IslamWeb
Question:
salaam.my cousin took funds for partnership for a vehicle inspection garage for opening another branch of his existing garage and agreed if it didnt work we will be 50-50 partners in his existing one.it has been 9 months since he took money.second one is not working out but he is not giving me anything from the existing as per our agreement from the 1st one that is running shop,out of which he is supposed to do 50-50.i gave him money after borrowing it from my brother on agreement that we shall pay back together from 3 to 4 months after i send him the money.he is not responding.please advise according to shareeah and sunnah of our prophet saw.The profits he is making are they halal for him and his family.I am suffering due to lack of income.jazakullah hu khair. s butt
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
If a person pays an amount of money to another person in order to invest it in trade or industry and the like in return for a known percentage of its profit, then this is considered a Mudhaarabah (profit sharing).
However, there are some conditions for the Mudhaarabah to be valid, among which are the following:
A- The person holding the capital money should not guarantee the money unless he is negligent or abusive.
B- None of the two parties should condition for himself a fixed amount of profit; rather, a known percentage, like one-half, one-third, or the like. For more benefit, please refer to Fatwa 94668.
Therefore, the agreement that took place between you and your cousin is a non-Sharee’ah compliant agreement; so on what basis does he give you half of the profit of the garage? However, if he started business with your capital money and there was a profit, then you deserve it according to the agreed upon contract.
On the other hand, since the capital money is still available in cash and your cousin did not invest it, then you have no right to anything of the profit of his garage. Therefore, you have to conduct a valid contract if you wish to continue dealing with each other, because the first contract is void as it is not clear whether it is about the new garage or the existing garage.
Allaah Knows best.