Who is Investment Manager?
Mudarib (profit-sharing manager), Investment Agent (fee-based manager), or Managing Partner.
Liability Standard: Misconduct and Negligence Only
Manager liable ONLY for: (a) Taʿaddī (willful misconduct); (b) Taqṣīr (negligence); (c) breach of contract. Manager NOT liable for market losses, valuation changes, or circumstances beyond control.
Key Rules
- Capital Loss Limited: If liable for capital loss, liability capped at capital amount — not for loss of expected profit.
- Beneficial Breach: If breach results in profit advantageous to principal, profit belongs to principal; manager retains fee and incentive.
- Market Risk: Principal bears market risk; manager not liable for downturn despite diligence.
- Evidentiary Burden: Usually principal proves misconduct; may be reversed per board discretion.