Muzara’ah is being used as an islamic finance method today and its roots come from ancient times. As Tavus mentioned :” Muaz İbnu Cebel (May Allah be well pleased with him) has let out on hire lands in return of one third or one fourth of crops during Rasulullah (P.B.U.H), Hazrat Ebu Bekr, Hazrat Ömer,and Hazrat Osman (May Allah be well pleased with them). This hiring affair has been acted since then.
In dictionary, muzaraa’ah means “partnership of one with another in agriculture”. It is used as a canonical term, and it is said to be an agricultural partnership to act land from one side and agricultural activity from other side. Muzaraa’ah company, like in other contract, is established with law offer and acceptance. While the company is being established, during contract, it is necessary to determine the period, kind of seed, amount of seed, proportions of shares. Land must be avaliable for agriculture,and must be submitted to farmer. Products are shared by partners, according to the principles determined before. Extra demand out of agreement spoils the contract. Muzaraa’ah company can be established in different ways. Land and seed could be from one side and effort, and agricultural machines from other side; or land from one side and seed, effort, machines from other; or effort from one and land, seed, and machines from other. Out of these types cannot be acceptable. In case of desruction of the contract, products are given to seed owner. and law just price is paid to other side.
Islamic finance enterprises act muzaraa’ah partnerships by taking care of these principles.