Source: Fatāwā ʿUlamāʾ-e-Ḥadīth, Kitāb al-Ṣalāh, Volume 1
Ali and Imran entered into a business partnership. Ali invested ₹500,000 while Imran contributed with his skills and expertise (i.e., goodwill). There was no written contract, but it was mutually agreed that profits would be shared equally (50-50). Eventually, the business suffered a loss and shut down, resulting in Ali losing his entire investment.
Now, Ali demands that Imran share half of the financial loss (i.e., ₹250,000), claiming it is a fair distribution. Imran refuses, arguing that he contributed labor and time, which is now lost, while Ali contributed only money.
Who is right from the perspective of Qur’ān and Ḥadīth?
This type of partnership is referred to in Islamic commercial law as Muḍārabah (مضاربة)—where one party provides the capital (Rabb al-Māl) and the other provides labor/skills (ʿĀmil). Profit is shared based on a pre-agreed ratio, but loss is borne solely by the investor (Rabb al-Māl), while the working partner loses only his time and effort.
Your partnership, although valid in structure, lacked a written agreement, which is strongly recommended in Sharīʿah to avoid such disputes.
"الوضيعة (الخسارة) في المضاربة على المال خاصة، ليس على العامل منها شيء، لأن الوضيعة عبارة عن نقصان رأس المال، وهو مختص بملكه، لا شيء للعامل فيه، فيكون نقصه من ماله دون غيره، وإنما يشتركان فيما يحصل من النماء"
Imām Ibn Qudāmah, al-Mughnī (5/22)
"In Muḍārabah, the loss applies solely to the capital and is not borne by the worker (ʿĀmil). Loss is defined as a decrease in capital, which belongs entirely to the investor (Rabb al-Māl); thus, the ʿĀmil bears no liability for that loss. Both partners share only in the profit."
Additionally, scholars have declared that stipulating the working partner (ʿĀmil) to be liable for capital loss is an invalid (fāsid) condition in a Muḍārabah contract.
الموسوعة الفقهية الكويتية (38/63-64)
Based on the above scholarly and jurisprudential evidence:
The financial loss is entirely upon Ali (the capital provider).
Imran (the working partner) is not responsible for returning any part of the capital, as he only invested time and skills.
Thus, Ali’s demand for Imran to pay half the loss is invalid, and Imran’s stance is correct according to the Qur’ān, Sunnah, and consensus of Islamic jurists.
❖ Question
Ali and Imran entered into a business partnership. Ali invested ₹500,000 while Imran contributed with his skills and expertise (i.e., goodwill). There was no written contract, but it was mutually agreed that profits would be shared equally (50-50). Eventually, the business suffered a loss and shut down, resulting in Ali losing his entire investment.
Now, Ali demands that Imran share half of the financial loss (i.e., ₹250,000), claiming it is a fair distribution. Imran refuses, arguing that he contributed labor and time, which is now lost, while Ali contributed only money.
Who is right from the perspective of Qur’ān and Ḥadīth?
❖ Answer
This type of partnership is referred to in Islamic commercial law as Muḍārabah (مضاربة)—where one party provides the capital (Rabb al-Māl) and the other provides labor/skills (ʿĀmil). Profit is shared based on a pre-agreed ratio, but loss is borne solely by the investor (Rabb al-Māl), while the working partner loses only his time and effort.
Your partnership, although valid in structure, lacked a written agreement, which is strongly recommended in Sharīʿah to avoid such disputes.
❖ Classical Islamic Ruling on Loss in Muḍārabah:
"الوضيعة (الخسارة) في المضاربة على المال خاصة، ليس على العامل منها شيء، لأن الوضيعة عبارة عن نقصان رأس المال، وهو مختص بملكه، لا شيء للعامل فيه، فيكون نقصه من ماله دون غيره، وإنما يشتركان فيما يحصل من النماء"
Imām Ibn Qudāmah, al-Mughnī (5/22)
"In Muḍārabah, the loss applies solely to the capital and is not borne by the worker (ʿĀmil). Loss is defined as a decrease in capital, which belongs entirely to the investor (Rabb al-Māl); thus, the ʿĀmil bears no liability for that loss. Both partners share only in the profit."
Additionally, scholars have declared that stipulating the working partner (ʿĀmil) to be liable for capital loss is an invalid (fāsid) condition in a Muḍārabah contract.
الموسوعة الفقهية الكويتية (38/63-64)
❖ Final Ruling:
Based on the above scholarly and jurisprudential evidence:
The financial loss is entirely upon Ali (the capital provider).
Imran (the working partner) is not responsible for returning any part of the capital, as he only invested time and skills.
Thus, Ali’s demand for Imran to pay half the loss is invalid, and Imran’s stance is correct according to the Qur’ān, Sunnah, and consensus of Islamic jurists.
