Source: Fatāwā ʿUlamāʾ-e-Ḥadīth, Kitāb al-Ṣalāh, Volume 1
ʿAlī and ʿImrān entered into a business partnership. ʿAlī brought in ₹500,000 (five lakh rupees) as capital, while ʿImrān offered his skills and labor (goodwill). There was no written agreement, but it was mutually agreed that profits would be split 50-50. The business later suffered a loss, and the entire capital invested by ʿAlī was lost. Now ʿAlī demands that ʿImrān bear half of the loss, i.e., ₹250,000.
ʿImrān, however, claims that he is not liable for any financial loss, as he did not invest money, and only contributed effort and time. He considers that his own labor and time have also been lost.
What is the correct ruling according to Qur’an and Sunnah? Who is right—ʿAlī or ʿImrān?
The business arrangement described falls under the Islamic contract of Muḍārabah (مضاربه).
Muḍārabah is a contract where:
Imām Ibn Qudāmah (رحمه الله) states:
Similarly, the Encyclopedia of Islamic Jurisprudence (al-Mawsūʿah al-Fiqhiyyah) states:
"In Muḍārabah, it is invalid to impose a condition on the worker (Muḍārib) to bear part of the capital loss, as that contradicts the essence of the contract."
(Mawsūʿah Fiqhiyyah, 38/63-64)
① In this scenario:
② ʿImrān’s labor and time are his investment, and since no profit was generated, he does not receive a return—but he also does not owe ʿAlī any money.
③ Even if the agreement had explicitly stated that ʿImrān would bear a share of the financial loss, that condition would have been invalid according to Islamic jurisprudence.
Final Verdict:
ʿAlī’s demand for loss-sharing is incorrect.
ʿImrān’s stance is valid under Sharʿī Muḍārabah principles.
وَاللّٰهُ أَعْلَمُ بِالصَّوَاب
ʿAlī and ʿImrān entered into a business partnership. ʿAlī brought in ₹500,000 (five lakh rupees) as capital, while ʿImrān offered his skills and labor (goodwill). There was no written agreement, but it was mutually agreed that profits would be split 50-50. The business later suffered a loss, and the entire capital invested by ʿAlī was lost. Now ʿAlī demands that ʿImrān bear half of the loss, i.e., ₹250,000.
ʿImrān, however, claims that he is not liable for any financial loss, as he did not invest money, and only contributed effort and time. He considers that his own labor and time have also been lost.
What is the correct ruling according to Qur’an and Sunnah? Who is right—ʿAlī or ʿImrān?
The business arrangement described falls under the Islamic contract of Muḍārabah (مضاربه).
Muḍārabah is a contract where:
- One party (Rabb al-Māl) provides capital (in this case, ʿAlī),
- The other party (Muḍārib) provides labor and expertise (in this case, ʿImrān),
- Profit is shared according to a mutually agreed ratio,
- Loss is borne only by the capital provider unless caused by negligence.
Imām Ibn Qudāmah (رحمه الله) states:
Similarly, the Encyclopedia of Islamic Jurisprudence (al-Mawsūʿah al-Fiqhiyyah) states:"In Muḍārabah, it is invalid to impose a condition on the worker (Muḍārib) to bear part of the capital loss, as that contradicts the essence of the contract."
(Mawsūʿah Fiqhiyyah, 38/63-64)
① In this scenario:
- ʿAlī is Rabb al-Māl (capital provider),
- ʿImrān is Muḍārib (working partner),
- The loss is borne entirely by ʿAlī, as per Sharīʿah,
- ʿImrān is not liable for the monetary loss.
② ʿImrān’s labor and time are his investment, and since no profit was generated, he does not receive a return—but he also does not owe ʿAlī any money.
③ Even if the agreement had explicitly stated that ʿImrān would bear a share of the financial loss, that condition would have been invalid according to Islamic jurisprudence.
Final Verdict:
ʿAlī’s demand for loss-sharing is incorrect.
ʿImrān’s stance is valid under Sharʿī Muḍārabah principles.
وَاللّٰهُ أَعْلَمُ بِالصَّوَاب
