I wanted to go into partnership with my brother and his partners in a large commercial venture that imports ready-made clothing. They said to me: Give us what you have, which was 200,000 riyals, and we will buy some goods with it. If the source is outside the Kingdom, for every dozen that comes in you will have ten riyals, and if the source of the goods is within the Saudi market, you will have two riyals for every dozen. I do not have any further income after the goods reach the store, whether they are sold or not, and the total profits will be known after working out the total number of all the dozens that came into the store by means of the invoices that show that. Is this transaction valid or not?.
Praise be to Allaah.
This transaction is not valid, for two reasons:
It is not permissible to allocate to the partner a specific amount of money; rather he should have a percentage of the profit, such as 5% or 10% and so on.
With regard to defining the profit as a set amount of money, that renders the partnership contract invalid.
Ibn Qudaamah (may Allah have mercy on him) said: If the share of one of the partners is set at a certain number of dirhams, or a certain number of dirhams is allocated along with his share, such as if he stipulates that he will get a percentage and ten dirhams, the partnership is invalid.
Ibn al-Mundhir said: All of the scholars from whom we acquired knowledge are unanimously agreed that mudaarabah loans are invalid if one of them or both of them stipulate that they will have a certain number of dirhams. Among those from whom we learned that were Maalik, al-Awzaa‘i, al-Shaafa‘i, Abu Thawr and ashaab al-ra’y. End quote from al-Mughni, 5/23. Continue reading