Mudaraba domestic trade contract

A mudaraba domestic trade contract is a type of partnership contract in Islamic finance that involves two parties: a capital provider (rab ul mal) and a trader (mudarib) who trades in goods within the domestic market.

Here are some key elements that may be included in a mudaraba domestic trade contract:

1. Parties: Identify the parties involved in the agreement, including the capital provider and the trader.
2. Capital contribution: Specify the amount of capital that the capital provider will contribute to the partnership.
3. Profit sharing: Define the profit sharing ratio between the capital provider and the trader. In a mudaraba contract, the capital provider receives a share of the profits generated by the investment, while the trader receives a management fee.
4. Loss sharing: Define the loss sharing ratio between the capital provider and the trader. In a mudaraba contract, the trader bears the risk of loss, while the capital provider’s liability is limited to the amount of capital contributed.
5. Investment guidelines: Define the investment guidelines and restrictions for the trader, such as types of goods allowed and any prohibited activities.
6. Management fee: Specify the management fee payable to the trader for trading in the goods.
7. Term: Define the duration of the partnership and any renewal or termination clauses.
8. Reporting and auditing: Specify the reporting and auditing requirements for the trader to provide regular updates to the capital provider on the performance of the investment.
9. Dispute resolution: Define the procedures for resolving any disputes that may arise between the parties.

Please note that this is just a general outline, and specific terms and conditions may vary depending on the project and the parties involved. It’s always a good idea to consult with a lawyer familiar with Islamic finance before entering into any legal agreement.