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Business Partners


BUSINESS PARTNERS

While many Muslims engage in partnership commercial enterprises, they remain ignorant of the Shar’iah’s rules essential for a valid partnership (shirkat) venture.

The proceeds acquired from an invalid partnership are akin to riba. It is, therefore, necessary for the partners in a business to acquaint themselves with the Shar’i rules pertaining enterprise.

The following are some salient features of a valid Islămic Shirkat (partnership):

Each partner represents the others.

All partners (active as well as inactive) are equal responsible to the creditors for debts.

The proportionate profit-sharing of the partners must be agreed on prior to the commencement of activities.

No specific sum may be agreed for any particular partner. Thus, wages cannot be arranged for a partner in lieu of his greater services. However, his share in the profit could be increased.

The capital investment of partners need not be equal. Profit-sharing may be unequal even if capital investment of the partners is equal.

All partners, active and inactive, share in both profits and losses.

The capital of any particular partner cannot be guaranteed.

Partners bear loses in proportion to their shares in the profits.

Any cash or goods taken from the partnership will be against the profit of the partners taking the items.

The joint assets cannot be used by any partner without the consent of all partners.

Death dissolves the partnership in relation to the deceased. On the death of a partner it is Wăjib for the other partners to immediately assess the standing of the business and to determine the assets of the deceased so that his property could be made over to his heirs.

 

Article taken (with Thanks) from Attarbiyah

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