Philosophy and Legitimacy of the Mudarabah Contract in Islam

Abstract

Mudarabah in Islamic jurisprudence is defined as a legitimate instrument for economic partnership, whereby capital is provided by one party (the Rab al-Mal) and labor and operational effort are provided by the other party (the Mudarib), with the resulting profit distributed between the parties according to a pre-agreed ratio. The legitimacy of this contract is grounded in the Qur’an, the Sunnah, and the consensus of jurists (Ijma), aiming to facilitate access to economic opportunities, remove hardship, strengthen justice, and promote the circulation of capital within society. Analysis of jurisprudential texts indicates that Mudarabah is not merely an economic tool but a systematic fiqh-based mechanism that aligns financial resources with practical capabilities of individuals, ensuring balanced responsibilities and benefits for both parties. Proper implementation of Mudarabah activates human potential, increases production and wealth circulation, and stimulates the Islamic economic system, serving as a prominent example of the realization of mutual assistance and economic justice. Findings demonstrate that Mudarabah is a mechanism that, while legitimizing economic activity, ensures equitable distribution of profits and risks between the parties.