Question
Zaid and Bakr entered into a partnership. Zaid is the investor. Bakr runs the whole operation. He does not invest capital. Bakr draws a monthly salary. A fixed sum is paid monthly to Zaid. Should there be any loss, the partners will bear it in proportion to their profit-sharing ratio which has been fixed at 40% for Zaid and 60% for Bakr. The business has suffered a big loss and a dispute has developed. What is the Shariah's ruling?
Answer
The partnership deal described by you is a Mudhaarabah transaction.
However, the manner in which this partnership was structured is Faasid. It is corrupt and invalid. Neither partner is entitled to a wage in a partnership nor is it permissible to fix a sum for a partner. The Shariah's ruling applicable to a Faasid Mudhaarabah is as follows:
• The Rabbul Maal, i.e. the investor of the capital (Zaid), is entitled to all the profits.
• The Mudhaarib, i.e. the worker/ manager (Bakr) is not entitled to a share of the profit. He is entitled to a fair market-related salary for the services he had rendered.
In view of the loss, both parties have to pay back whatever they had withdrawn by way of 'salary', 'fixed sum', etc. This will be offset against the loss. If this profit is not sufficient to offset the loss, then Zaid (the Investor) alone has to bear the balance of the loss.
- Source
- themajlis.co.za
- Published in
- The Majlis Vol 21 No 01
- PDF page
- 4
Appears under Questions and Answers (approximate).