❖ Question:
A man gives five lakh rupees to his brother for business with the agreement that he will receive ₹50,000 fixed profit every month, regardless of profit or loss.
Is such a contract permissible in Islam? Also, how can one withdraw from such an agreement if losses occur?
❖ Answer by: Fadīlat al-Shaykh ʿAbd al-Wakīl Nāṣir ḥafiẓahullāh
❖ ① Clarifying the Nature of the Business Contract
Before evaluating the contract's Sharʿī status, it is essential to determine the type of partnership involved:
◈ Muḍārabah (Silent Partnership):
- One party provides capital, the other provides labor/effort.
◈ Mushārakah (Joint Partnership):
- Both parties contribute capital and effort.
✔ Both are permissible in Shariah, but they must meet specific conditions to remain valid.
❖ ② Profit Must Be Based on Percentage, Not a Fixed Amount
In both Muḍārabah and Mushārakah:
✔ Profit sharing must be based on a pre-agreed percentage, such as 40% or 50% of actual profits.
✘ Setting a fixed monthly amount (e.g., ₹50,000) as profit is not permissible, as it resembles interest (ribā) and is invalid in Sharīʿah.
❖ ③ Ruling in Case of Loss
✔ Islamic principles of loss-sharing are as follows:
◈ In
- The investor (capital provider) bears the monetary loss.
- The working partner receives no wage or compensation if there is no profit.
◈ In
- Loss is shared proportionately according to each partner's capital contribution.
❖ ④ How to Withdraw or Amend the Contract
✔ To withdraw from or correct a non-Sharʿī agreement:
- ➤ Mutual consent of both parties is necessary.
- ➤ A new written agreement should be made in the presence of two witnesses.
- ➤ The old contract should be formally canceled in writing.
- ➤ If unsure about Sharʿī implications, consult a qualified scholar to draft a new, compliant agreement.
❖ Summary:
✔ Setting a fixed profit amount (like ₹50,000 monthly) is Sharʿīly impermissible.
✔ Profit must be defined as a percentage of actual earnings.
✔ In case of loss, the investor bears the financial loss, and the partner receives no return for effort unless profit occurs.
✔ To exit or revise the contract, do so with mutual agreement, in writing, and with witnesses.
Conclusion:
Sharīʿah mandates fairness, risk-sharing, and transparency in financial dealings. Setting a guaranteed return in a business contract undermines these principles and falls under the prohibition of ribā. All business partnerships should be established with compliance to Islamic rules to ensure ḥalāl earnings and blessings in wealth.
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