Musharakah(Partnership)

Musharakah Contract (Partnership)

Musharakah is a type of Shirkat-ul-Amwal which literally means sharing.

In the context of business, it refers to a joint enterprise in which partners (or parties) to the enterprise share the profit and loss of the enterprise.

In Mufawadah (Musharaka) each of the partners contributes a portion of the overall capital, equally participates in work and management efforts, and equally bears responsibility and liability for debts.

Musharakah has far reaching implications for Islamic banking and finance in the modern context and provides an excellent alternative to the interest-based economy.

In a Musharakah, the party investing the capital shares equally in both the profit and loss, which is different from an interest-based system where the upside is limited while the downside is very nearly non-existent.

Research