AFP367 Tutorial 5&6 - AFP367 Tutorial 5 6 1 What is the...

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AFP367 Tutorial 5 & 6 1. What is the meaning of musharakah from the literally and technical perspective? Musharakah is a partnership whereby profits are shared as per an agreed ratio whereas the losses are shared in proportion according to the capital investment of each partner. 2. What are the elements and conditions of musharakah? The elements of musharakah includes: offer and acceptance, contracting parties (two or more) and subject matter of the agreement (capital and work). 3. What are the different types of musharakah? Musharakah can be divided into two main types: inan (unequal shares partnership and mufawadah( equal shares partnership). 4. How the method of profit distribution in musharakah contract is concluded? The proportion of profit distribution is calculated according to the agreement of the contracting parties up front. 5. Is it necessary that the ratio of profit for each partner must conform to the ratio of capital invested? The Malikis and the Shafi’is view that it is necessary for the validity of musharakah that the profit should be exactly in proportion of the capital invested. The Hanbalis and Hanafis view that the ratio of profit may differ from the ratio of the capital invested if the contracting parties agreed on that. 6. When the musharakah can be terminated? - Every partner has the right to terminate musharakah at any time after giving his partner a notice to this effect. - If there is a dispute between the partners on this matter - if any one of the partners passed away - if any one of the partners becomes insane or incapable of effecting commercial transaction 7. What is mudarabah? A type of partnership where one party supplies the capital and the other the labour. The person who owns the capital is called the owner of the capital (rabb al-mal) and the person who performs the works is called the workman (mudarib). 8. Can the duration of mudarabah be fixed based on periodical withdrawals? The parties have all the right to withdraw from the contract at all times, but they are bound by the terms and conditions stipulated in the contract agreement 9. Under what situation mudarib is liable to guarantee the capital? The mudarib is a trustee in respect of the capital in his hand, therefore he cannot bear any losses unless negligence or misconduct is proven. 10. Can mudarabah contract be liquidated? - with the agreement of the parties involves in mudarabah - on the date of maturity if the two parties have earlier agreed to set a time limit for it - when the funds of mudarabah contract have been exhausted or have suffered losses - the death of the mudarib or the liquidation of the institution that acts as mudarib
- on the maturity of a mudarabah operation, the assets should be liquidated. 11. What is kafalah and provide the technical definition?

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