Mudharabah

Mudharabah is a contract that has been widely know among Muslims since the age of the prophet (Saw) and has been practiced by the Arabs even before the introduction of Islam when prophet Muhamad (Saw) was a merchant by profession, he underlook a Mudharabah Contract with khodijah. Therefore, from the perspective, of Islamic Law, the practice of Mudharabah is permissible, wheter according to Al Qur’an, sunnah or ijma.

In the practice of Mudharabah between khadijah would entrust to prophet muhamad (Saw) her merchandise for sale abroad. Khadijah in this respect assumed a role as the capital owner (shahib al-maal), while Prophet Muhamad (Saw) as the bissines manager (Mudharib). It is this from of contract between two parties that defines a Mudharabah contract- when one party serving as the capital owner entrust a certain amount of capital to be managed by the other party who manages a profit- seeking venture. Or in brief, Mudharabah contract is a venture agreement between party’s capital and the other party’s non- capital contribution.

The Application of Mudharabah

The mudharabah scheme that we have discussed this far is one that applies for two direct parties between a shahub- al maala mudharib. This is a standard scheme that may be found in classical Islamic fiqih textbooks. Moreover, such was the scheme of mudharabah practiced by the prophet and his companions as well as by some Muslims in the proceeding era. In such typical practices, there occurs direct financing from the shahib al-maal as a surplus unit to the mudharib as a deficit unit. As such, the role of the bank as intermediary does not exist.

Multi level marketing (MLM) is derived from English, multi means a lot, means tiered or terraced levels, while marketing means marketing. Thus, multi-level marketing is a marketing tiered lot. Called multi-level, because it is an organization of distributors who carry a lot of sales are tiered or terraced.

Law of MLM is permissible (allowed), so long as it does not contain the following elements, Riba, Gharar or uncertainty, or adverse dharar / oppressing others, and Jahalah or MLM is not transparency. Because trade, therefore also must meet the legitimate requirement engagement.

This mechanism is operating on an MLM distributor can invite others to participate as well as distributors. Then the other person can also invite anyone else to join. And so on, all are invited and join a group of independent distributors who invites someone else to level indefinitely.

By_Rif’atul Machmudah (11220027)