What is the difference between Mudhaaraba and Mushaaraka?

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

Mudhaarabah (or, profit-sharing) is one type of Mushaarakah  (partnership contracts). What distinguishes it (Mudhaarabah) is that the capital money is from one party and the work and effort are from the second party, so it is a partnership of money and bodily effort, and we have clarified the conditions for the permissibility of it in Fatwa 10549.

On the other hand, there are many forms of Mushaarakah other than the Mudhaarabah; The Hanbali scholar Al-Khiraqi said: “If two persons have a partnership in their effort and the capital of one of them, or two persons in their effort and the money of others, or one person in his effort and the capital of another, or the capital of both of them and the effort of one of them, or in the capital and effort of both of them – whether the capital is contributed equally or not – then all of this is permissible.”

For more benefit, please refer to Fatwa 164735.

Allaah Knows best.