Al-Muwatta Hadith 32.9

Yahya said that Malik spoke about an investor who made a qirad loan to a man, who used it and made a profit. Then the man bought with all the profit a slave-girl and he had intercourse with her and she became pregnant by him, and so the capital decreased. Malik said, "If he has money, the price of the slave-girl is taken from his property, and the capital is restored by it. If there is something left over after the money is paid, it is divided between them according to the first qirad. If he cannot pay it, the slave-girl is sold so that the capital is restored from her price." Malik spoke about an investor who made a qirad loan to a man, and the agent spent more than the amount of the qirad loan when buying goods with it and paid the increase from his own money. Malik said, "The investor has a choice if the goods are sold for a profit or loss or if they are not sold. If he wishes to take the goods, he takes them and pays the agent back what he put in for them. If the agent refuses, the investor is a partner for his share of the price in increase and decrease according to what the agent paid extra for them from himself." Malik spoke about an agent who took qirad money from a man and then gave it to another man to use as a qirad without the consent of the investor. He said, "The agent is responsible for the property. If it is decreased, he is responsible for the loss. If there is profit, the investor has his stipulation of the profit, and then the agent has his stipulation of what remains of the money." Malik spoke about an agent who exceeded and borrowed some of what he had of qirad in money and he bought goods for himself with it. Malik said, "If he has a profit, the profit is divided according to the condition between them in the qirad. If he has a loss, he is responsible for the loss." Malik said about an investor who paid qirad money to a man, and the agent borrowed some of the cash and bought goods for himself with it, "The investor of the capital has a choice. If he wishes, he shares with him in the goods according to the qirad, and if he wishes, he frees himself of them, and takes all of the principal back from the agent. That is what is done with some one who oversteps."