Investigating the Possibility of Stipulation of the Trustee's Liability in the Mudarabah Contract and Banking Profit and Loss Sharing Contracts from a Legal and Jurisprudential Perspective (Imamia and Sunni)

From the perspective of civil jurisprudence, the trustee is not liable for any damages unless in case of excessive use or failure of due care. However, a question arises whether a trustee may be liable, by inserting a condition, even in the absence of excessive use or failure of due care? This is a controversial precedented issue in the Islamic jurisprudence and the aspect which makes it up-to-date is its analysis in “banking profit and loss sharing contracts including Mudarabah”. The vast majority of Shiite and Sunni jurists consider the stipulation of the trustee’s liability in the form of a “corollary condition” as “null and void and invalidating” due to its being against the requirements of contract and its contradiction with the requirements of trust, ownership and representation of Mudarabah. The few jurists, under whose fatwa liability in the form of condition about performance is valid, consider this condition as a promise which merely creates a “pure imperative rule” and is not capable of creating “the positive rule of liability”. It appears that the evidence of those who consider this condition as valid are not convincing and the evidence of opponents such as the absoluteness of “Sahiha of Mohammad ibn Ghais” which declares the stipulation of merchant’s liability as the cause of the “transformation of Mudaraba nature” into usurious loan, are preferable. Although the Iranian legislator has also accepted this opinion in article 558 of the Civil Code, article 12 of the Executive Directive of Usury-Free Banking Act passed in 1984, has permitted the trustee's liability which needs amendment. This research is based on a descriptive-analytical method and the use of documentary collection tools. The main approach of this paper is jurisprudential; however, given the need to analyze the relevant Iranian laws, the issue has been studied from a legal perspective as well.