• Some transactions may earn profit and others may suffer loss.
• Profit is first used to offset those losses.
• Only the remaining net profit is distributed according to the agreed ratio.
The practical test is to separate normal business loss from loss caused by negligence or misconduct. Genuine investment loss follows the relevant capital rule, while a party remains responsible for loss caused by its own fault.
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investment partnership (مضاربة): Business, Profit and Termination
• Some transactions may earn profit and others may suffer loss.
• Profit is first used to offset those losses.
• Only the remaining net profit is distributed according to the agreed ratio.
The practical test is to separate normal business loss from loss caused by negligence or misconduct. Genuine investment loss follows the relevant capital rule, while a party remains responsible for loss caused by its own fault.