Mudaraba to Commenda
The mudaraba of Islamic law separates the one who puts up the capital from the one who actually travels and trades, splitting the profit at an agreed ratio. The most interesting part is how it handles loss. If the venture fails, the investor loses capital and the traveller loses nothing in money — what he loses is the time and effort he spent. The contract formally recognised that there are two kinds of loss. It is the ancestor, by eight hundred years and more, of what we now call sweat equity. On the Mediterranean side, a closely similar contract called the commenda appears in the tenth century and comes into wide use from the twelfth to the fourteenth. Where only one side put up capital, the profit went three-quarters to the investor and a quarter to the travelling merchant; where both did, they contributed two to one and split the profit down the middle. Even the ratios were standardised. Worth adding: in practice, Jewish merchants used the Muslim-style contract more often than the one grounded in their own law. What crossed the religious boundary was whichever contract worked better.
The myth, corrected
The Islamic mudaraba simply became the European commenda
The single-line transmission story is not settled. Candidates for the origin include Babylonian tappûtum, Greek and Roman sea loans, the Byzantine chreokoinonia, the Jewish isqa and the Muslim qirad — and the commenda has features none of them share. What can be said today is that the closest resemblance is to the qirad, the mudaraba.