The World Federation One Stop Fiqh

Ruling 2367

It is not valid if a child, insane person, or someone who has been proclaimed bankrupt (mufallas) or is foolish with finances (safīh)1 lends out his property. However, it is not a problem if the guardian (walī) deems it a matter of primary importance and lends out property belonging to someone over whom he has guardianship (wilāyah). Similarly, there is no problem in a child merely being an intermediary for delivering the property to the borrower.

1 Ruling 2091 provides further clarification of this term: it refers to someone who spends his wealth in futile ways.