Chapter: Partnerships of Reputation (sharikat al-wujūh), of Labor (sharikat al-abdān), and Comprehensive Partnerships (mufāwaḍah)

First: Partnerships of Reputation (sharikat al-wujūh)

A sharikat al-wujūh is an arrangement in which two or more persons join together to purchase goods on the strength of their joint credit. Whatever profit they earn is divided between them according to the ratio they have stipulated. It is so named because it requires no initial capital; what is offered instead are their personal guarantees, social standing, and the confidence that other merchants place in them. Relying on that credit, they buy and sell, then share the profit according to the agreed terms, in light of the Prophet’s statement, “The Muslims are bound by their conditions.”

This form of partnership closely resembles the ‘inān partnership and therefore carries the same legal ruling.

Each partner acts as the other’s agent and as his guarantor for the purchase price, for this kind of partnership rests on both agency and suretyship.

The share owned by each of them is fixed by their stipulation—whether equal halves, a lesser share, or a greater one.

Each partner bears any loss in proportion to his share in the partnership: whoever owns one-half of the venture is liable for one-half of the loss, and so on.