Rulings of Trade
Mufti Ali Asghar Attari Madani
Business partners cannot force each other to sell their shares
Q: What do the scholars of Islam say about the following matter: my friend and I purchased land, and we split the cost equally. Now my friend told me he wants to sell the land, but I have no intention of selling, and I do not have enough money to purchase his share. He is encouraging me to sell my share even though I have no issue with him selling his portion to someone else. What does shariah command us to do in this instance? Do I have to accept his demand?
بِسْمِ اللّٰہِ الرَّحْمٰنِ الرَّحِیْمِ
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: In the aforementioned scenario, both of you have joint ownership over a piece of land. The ruling of a shared possession is that each owner has the right to use their share however they wish, but they are a complete stranger in relation to the other’s share. Therefore, if a partner wishes to sell his share, he can sell it to the joint owner or someone else entirely. However, he has no control over his partner’s share, and he cannot force him to sell.
The erudite Hanafi jurist, Muftī Amjad ꜤAlī al-AꜤẓamī رَحْمَةُ الـلّٰـهِ عَلَيْه writes:
In a joint partnership, each owner can use their share however they wish, but with regards to their influence over the other’s share, they are like strangers. So, he can sell his share without gaining permission from his partner, and it can be sold to the other partner or someone else. If the partnership was such that it was not originally a partnership, but they combined their possessions or they became mixed, then seeking permission from his partner is necessary if he wishes to sell to someone else. If it is originally a partnership, but the partner is harmed if the share is sold, then it cannot be sold to someone else without gaining permission from the other partner first.[1]
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
How is it to establish a business partnership without determining profit share?
Q: What do the scholars of Islam say about the following matter: I have knowledge of purchasing scrap and extracting silver from it. My friend became a business partner and gave me £200,000, and I contributed £200,000 too for the purpose of buying scrap and extracting silver from it. With regards to profit, we agreed that I would give him an amount of profit that I desired, but we had no discussion relating to loss. What is the ruling on establishing such a partnership?
A: In a business partnership, it is necessary to determine the profit of each party through a percentage. If a percentage is not stipulated, then the partnership is void. For this reason, the partnership described by the questioner is void and must be ended immediately. If you wish to create a new partnership, a percentage of profit must be allocated to each party. There is no harm in giving a low percentage of profit to the business partner who is not involved or does very little work.
The principle of shariah regarding loss is that both parties will cover the damages in proportion to their money, even if an agreement was made that opposes this principle. If the investment of both parties is equal, as in the case of the questioner, both parties will cover incurred losses equally.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
Buying back an item sold on credit for less
Q: What do the scholars of Islam say about the following matter: I sell cars on an instalment payment basis. If I sell a car and its documents to someone I know, he can sell it on the market. However, if he decides to sell it back to me, is it permissible for me to buy it even though it still has outstanding payments?
A: Keep in mind that this is not the usual transaction of buying and selling. You wish to purchase the car that you are selling in instalments before the entire amount is given. In order for this to happen, you must not buy it for less than you sold it for. Paying less is impermissible and a sin. It is permissible to buy it for the selling price or for a price higher than it.
It is impermissible to buy back the sold item for less than its selling price because that amount which you have not yet acquired from the price of the car you are selling in instalments, has not entered your liability. If you buy the car back at a lower price before all the price enters into your liability, the same car which you sold returns into your possession, and some of the price will be in exchange for some, and the price which remains will be acquired without any exchange, which will be impermissible as it falls into ribḥ mā lam yaḍman (profit of that which there is no liability for).
For example, if you sell a car on credit for £10,000, it will be necessary upon the buyer to pay this amount, and it will not enter your liability until he does so. The amount of money he actually pays will continue to enter your liability. If he has paid £2,000, and you then buy the car back for less than what you sold it for, for example £5,000, you will receive the car, and £5,000 of the £8,000 he had to give you will be in exchange for this £5000. However, the remaining £3,000 which the buyer will give you will be received by you without any exchange, which will be impermissible as it will be profit of that which there is no liability for.
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
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