i. Mudaraba contract
This is a type of partnership contract where only one partner (rab al mal) contributes
finance and the other partner (mudarib) contributes skills and expertise. The partner who
contributes finance has no right to interfere in the day to day affairs of the partnership.
(2 marks)
ii. Musharaka contract
This is an equity financing contract for investment in business ventures or specific
business projects and consist of at least two partners called the mushasrik. The
mushariks jointly contribute capital and expertise in the business.
(2 marks)
iii. Murabaha contract
This is a deferred payment sales or an instalment credit sale usually for the purchase of
goods for immediate use. The seller therefore sells goods to the buyer, and the buyer
pay later by instalments.
(2 mark)