A type of partnership (musharakah or sharikah) which holds all participating parties at equal footing in terms of funds contributed, right to management, liabilities, etc. This equality in all respects is effective from the date of contract to the date of termination. In other words, each of the partners contributes a portion of the overall capital, equally participates in work and management efforts, and equally bears responsibility and liability for debts. By virtue of his contribution and/ or liability, each partner has an equal share in profits and losses from the commencement of the partnership to its expiration or termination date.

The mufawadah partnership belongs to the class of contractual partnerships (al-aqd partnerships).