Examination of the Guarantee Clause in Contracts (Mudarabah and Civil Partnership) in Iran's Legal System with a Focus on Shi'a and Hanafi Jurisprudence

Abstract

The guarantee clause for profit in Mudarabah and partnership contracts is among the stipulations employed by banks and financial institutions to pursue commercial activities for profit within the framework of facilities. These institutions attempt to present such clauses as compliant with Islamic principles. However, substantive laws, specifically Articles 558 and 575 of the Iranian Civil Code, explicitly identify these clauses as inconsistent with the intrinsic requirements of such contracts. Islamic jurisprudence offers a clearer perspective, with notable differences between Shi'a and Hanafi schools on this matter. This research seeks to uncover the most accurate legal stance. Article 575 suggests an exception to the intrinsic nature of partnership by proposing a higher profit margin in exchange for additional efforts, an exception that Shi'a and Hanafi jurisprudence do not accept based on their interpretations. Similarly, in Mudarabah, the guarantee clause is implicitly assumed by the legislator, which leads to misinterpretations of Article 558 of the Civil Code among jurists. The latter part of the aforementioned article contradicts established principles of Islamic jurisprudence. Consequently, Shi'a and Hanafi jurisprudence, along with Hanafi legal provisions (Articles 1426–1428 of the Majallat al-Ahkam al-Adliyah), offer a clearer and more just perspective. Unfortunately, Iranian legislators have not adequately followed these insights. Therefore, revising the aforementioned articles is absolutely necessary.