Bahishti Zewar, Fiqh, Part 5-Principles of Business / Sunday, November 28th, 2010

Partnerships are of two kinds:

(a) Shirkat-e-Imlâk: Examples: (1) A person passes away and there are several inheritors to his estate. (2) Two persons contributed an amount of money and purchased one item. (3) One person gave a gift to two persons.
The rule with regard to such a partnership is that no one has a right to do anything with the item without the permission of the other.

(b) Shirkat-e-‘Uqûd: Two persons made a mutual agreement that they will conduct a business together. The categories and rules of such a partnership are as follows:

1. One of the categories of shirkat-e-‘uqûd is shirkat-e-‘inân.
Shirkat-e-‘inân: Two persons contribute a certain amount of money and decide to purchase clothing, grain, etc. and thereafter start a business with it. The condition in such a partnership is that the contribution of both must be in cash irrespective of whether it be silver coins, gold coins or currency notes. Based on this, if both of them add something that is not cash and wish to commence a business on a partnership basis or, one of them contributes cash and the other contributes something else, this partnership will not be valid.

(i) In shirkat-e-‘inân it is permissible for one person to contribute more than the other and the share of the profits will be according to what they agree upon. That is, if they make this condition that there will be a difference in the contribution of each one but the profits will be shared equally; this will be permissible. If they make a condition that the contribution will be equal but the share of profits will not be equal, e.g. the profit sharing ratio will be on a one third/two third basis, this will also be permissible.

(ii) In shirkat-e-‘inân, each partner has the right to exercise his power and do whatever he wishes with the tradeable goods on the condition that whatever he does is not contrary to their agreement. However, the debts of one partner will not be demanded from the other partner.

(iii) Two persons agreed on entering into a partnership and they also agreed on the amount of each one’s contribution. However, before they could purchase anything in order to commence their business, all the money was destroyed or the contribution of one of the partners was destroyed. In such a case, the partnership will become invalid.
If one of the partners has already purchased some goods and the contribution of the other partner was destroyed, the partnership will not become invalid. The goods that have been purchased will belong to both partners, and according to the percentage that the other partner (the one whose contribution was destroyed) contributed into the capital, he will have to give that percentage to the other partner (the one who had purchased the goods). For example, one person contributed R9 and the other person contributed R3. The person who contributed R9, purchased some goods with it. The one who contributed R3, lost his money. The one who contributed R3 therefore has a share of one third in those goods. The person who contributed R9, will collect one third of this amount (i.e. R3) from this person and these goods will be sold on a partnership basis.

(iv) In such a type of partnership it is not necessary for the contribution of both the partners to be mixed. Such a partnership becomes entrenched by mere îjâb and qubûl (offer and acceptance).

(v) The sharing of profits have to be specified on a percentage basis, eg. 50% or one third, two thirds, etc. It is not permissible for them to say that one will receive R100 and the other will receive the remainder.

2. Another category of shirkat-e-‘uqûd is shirkat-e-sanâ’i. It is also called shirkat-e-taqabbul.
Shirkat-e-sanâ’i: For example, two tailors or two dyers make an agreement that whatever work comes to any one of the two, he will accept it and whatever money he gets paid for this work, it will be shared between the two based on a certain percentage. This is permissible.

(i) Work that is accepted by one of them will become necessary on both of them. For example, one partner accepted a job to sew a garment. Just as the customer can demand the garment from this partner, he can also demand it from the other partner as well. Similarly, just as the partner who sewed it can demand the money for the labour, the other partner also has the right to demand for it from the customer. Just as the customer can absolve himself by paying the partner to whom he had given the job, he can also absolve himself by paying the other partner.

3. Another type of partnership is shirkat-e-wujûh. That is, the partners do not have any money or wealth, nor do they have any profession or occupation. They merely make a mutual agreement that they will take goods on credit from the traders and go around selling them. Even in such a partnership, each partner will be a guarantor for the other. The profits will be shared according to the percentage that they agree upon. For example, if they agree that they are purchasing the goods on an equal basis, the profits will also be shared equally. If they agree that they are purchasing the goods on a one third/two thirds basis, the profits will be shared accordingly.

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