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Law - Economy
 

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Lesson 78

Business (1)

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Main Points
 

·       Partnerships for wealth development through trade, agriculture or industry are lawful as enacted and admitted by the Prophet (peace be upon him) in various forms.[13]

·       Al-`Anan (Cooperative) partnership: In which individuals have their shares to invest money and divide profit and loss according to the value of each share.

·       Al-Abdan (Manual) partnership: Individuals participate in a certain activity and agree on dividing the revenue between them.

·       Al-Wujuh (Well-Known Partner) partnership: It is the participation in trade transactions, purchase and sale, while dividing profit and loss.

·       Financing a profit-sharing venture: A Muslim gives another a sum of money to invest in a lawful business, and they share both profit and loss according to conditions they had stipulated.

·       Comprehensive partnership: It includes the above dealings, as the two partners authorize each other in carrying out any transactions and they share in both profit and loss.

·       Sharecropping: It is to let another cultivate his land so as to share in a known portion of the harvest.[15]

·       Watering for part of the crop: It is to contract with another concerning irrigating his crop in return for a known share of their yield.


 

The legality of partnership:  

The Messenger of Allah (peace be upon him) said:

“Allah, Most High, says: I make a third with two partners as long as one of them does not cheat the other, but when he cheats him, I depart from them.” (Reported by Abu Dawud)

Manual partnership:

`Abdullah Ibn Mas`ud (may Allah be pleased with him) narrated:

“I, `Ammar, and Sa`d became partners in what we would receive on the day of Badr. Sa`d then brought two prisoners, but I and `Ammar did not bring anything.” (Reported by An-Nasa’i and Abu Dawud)

Financing a profit-sharing venture:

It was applied in the time of the Prophet Muhammad (peace be upon him) and he agreed upon it. (Minhaj Al-Muslim)

Sharecropping and watering for part of the crop:

`Abdullah Ibn `Umar (may Allah be pleased with him) narrated:

“The Prophet concluded a contract with the people of Khaybar to utilize the land on the condition that half the products of fruits or vegetation would be their share.” (Reported by Al-Bukhari and Muslim)

Rafi` Ibn Khadij (may Allah be pleased with him) narrated that the Prophet said:

“It is better for one of you to lend to his brother than to take a prescribed sum from him.” (Reported by An-Nasa’i)