Mozara’ah Contract in Islamic Finance

UAE Laws and Islamic Finance

Mountains Above Beirut

Thoughts from Iraj Toutounchian’s Islamic Money & Banking, Integrating Money in Capital Theory

In Islamic jurisprudence, Mozara’ah is an agreement between the owner of land and the farmer, according to which the farmer (Amel) cultivates the land and the produce is divided between the parties in an agreed fixed-ratio.  A more elaborate definition describes it as a contract in accordance with which one of the parties gives a plot of land for a fixed period to the other party to cultivate and divide the yield.’  (Shirazi 1988: 229).

The person giving the arable land as Mozara’ah should either be the landlord or the owner of the benefits thereof.   The specifications, boundaries and area of the land should be clearly fixed and known.  It has to be capable of cultivation and of yielding the produce expected.  Shirazi says:

The framework of duties and responsibilities of the

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