All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
The legal characterization/classification of the business undertaken by schools under the name of school cafeterias is a Mudarabah contract since the capital is provided by the students while the work, management, and follow up is conducted by a committee of school teachers. In other words, the students (Capital provider/financier) participate in raising the capital at the beginning of the academic year and a designated committee runs the business in its capacity as Mudarib (working partner) who utilizes the help of some students to sell snacks, water, and juice to their fellow students.
From an Islamic perspective, the following conditions must be met as regards the validity of this project (School cafeteria):
First: Shares of the students participating in the capital must be known and recorded in the books.
Second: Students profits must be known as a ratio; not as a lump sum.
Third: The profits of the teachers running this business (Mudarib) must be known as a ratio; not as a lump sum.
Fourth: The wages taken by the students or any individuals whose assistance is sought by the committee running the cafeteria must be known and specified.
In conclusion, the Mudarib, being entrusted, is free to run the cafeteria in the best interest of the students, but he is only entitled to his wages at the end of the Mudarabah period (School year). However, if he takes any portion of his wages before that, then it is part of the profits in case there are profits. If there aren`t, then he gets nothing. And Allah the Almighty knows best.
[1] Mudarabah is a partnership where one party provides the capital while the other provides labor and both share in the profits. The party providing the capital is called the rabb-ul-mal ("silent partner", "financier"), and the party providing labor is called the mudarib ("working partner"). In classical mudaraba, the financier provides 100% of the capital; cases where the capital is provided by both the financier and the working partner result in a joint mudarabah-musharakah contract. Profits generated are shared between the parties according to a pre-agreed ratio. If there is a loss, rabb-ul-mal will lose his capital, and the mudarib party will lose the time and effort invested in the project. The profit is usually shared 50%-50% or 60%-40% for rabb ul mal-mudarib.
