Qitzur Shulchan Arukh – 66:4

ד: אֲבָל שֶׁיִּקְנֶה הַמְקַבֵּל אֶת חֵלֶק הָרֶוַח שֶׁל הַנּוֹתֵן בְּכָךְ וְכָךְ, שֶׁיִּהְיֶה מְחֻיָּב לָתֵת לוֹ אַחַר כָּךְ כָּךְ וְכָךְ בְּכָל אֹפֶן, זֶהוּ אָסוּר, אֶלָּא צָרִיךְ שֶׁיִּהְיֶה לְהַמְקַבֵּל הַבְּרֵרָה

However, if the recipient buys the profit share of the investor for a certain amount, which he will be required to give afterwards this certain amount in any case, this [the deal, regardless of whether it ends up making a profit] is forbidden. Rather the recipient must have the choice.

Commenting on both this and the previous se’if

R’ Ganzfried told us that this is the basic mechanics of the heter iska.

The worker gets a choice, whether to pay the investor a fixed sum or a share of the profits. In which case, if he chooses to pay the fixed sum, it is not prohibited as interest. He adds that this outcome is more likely, since paying a share of the profits would require taking an oath about the amount of the profit. But since he has a choice, it’s not compelled by the effective loan (discussed at the beginning of the siman) and thus permissible. Unlike if the choice were the investor / “lender”‘s, and thus could be compelled onto the worker / “borrower”.

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