Legal Analysis of Decisive Profit in Mudaraba

One of the fundamental features of Mudaraba is jointly participating of both parties of the contract in the whole profit and loss caused by the commercial activity in such a way that each of them has a share in the final obtained profit according to what they have agreed on and the agent as a trustee of the owner does his best efforts to use his capital in a profitable manner. This article aims to analyze the decisive profit in bank Mudaraba by emphasizing on the actual practices of the banks, legal analysis of law issues and also the existing judicial procedure. Generally in bank Mudaraba the bank seeks to gain decisive portion of the reached profit regardless of real consequences of the contract, while the substantial component of this kind of contract, i.e. Mudaraba, is doing commerce and participating in the eventual profit and loss of the activity. Keeping that in mind, it seems that if the only effect of this contractual provision was just transforming the contract into a one which is valid under Article 10 of the Civil Code, the whole transaction would be a usury contract. On the other hand if the provision itself was just recognized illegal and consequently null and non-nullifying, it would be accounted as canceled. So the way of distributing the profit between bank and agent still remains vague. Accordingly it must be accepted that this kind of provision which determines the decisive portion of the gained profit on behalf of the bank, based on the Article 233 (1) of the civil code, is null that nullifies the contract.