Musyarakah Essay

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

FUNDAMENTALS OF SHARIAH presented by

Ahmad Sanusi Husain

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CONTENTS

1. Participating Contracts - Types of Participating Contracts - Essential Elements - Necessary Conditions 2. Supporting Contracts - Types of Supporting Contracts - Essential Elements - Necessary Conditions

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TYPES OF PARTICIPATING CONTRACTS
Shirkat (Partnership)

Shirkat Milk (Holding Partnership)
Inheritance (Faraid) Will (Wasiyyat) Mudharabah (Trustee Partnership) Shirkat Amwal (Partnership in capital)

Shirkat Uqud (Contractual Partnership)

Shirkat A’amal (Abdan) (Partnership in work)

Shirkat Wujuh (Receivable partnership)

Shirkat Mufawada (equal shares)

Shirkat Inan (unequal shares)

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PARTICIPATING CONTRACTS Definitions of Musharakah and Mudharabah Musharakah is a general partnership whereby two or more parties enter into a contract to exploit their labour and capital jointly and to share the profits and loses of the partnership. Mudharabah is a contract where the owner of capital entrusts his funds to an entrepreneur who contributes skills is business and the profits generated is to be shared between them.
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There are five essential elements of Musharakah and six of Mudharabah as follows. Musharakah (i) partners (ii) capital (iii) business (iv) profit sharing and (v) contract Mudharabah (i) owner(s) of capital (ii) entrepreneur (iii) capital (iv) business (v) profit sharing (vi) contract

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(1)

Musharakah There are 16 necessary conditions relating to its essential elements. (1) Contract There are three necessary conditions, i.e.: (i) in definite and decisive language. In the present or past tense, not future tense nor imperative (ii) acceptance must agree with offer and (iii) offer and acceptance made at the one and the same meeting
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(2)

Partners must meet the following four necessary conditions: (i) capable of taking responsibility, i.e. of sound mind reached the age of puberty