Book of Partnership

Partnership takes several forms.

1. Labor partnership (shirkah al-abdan): two workers—such as porters or other tradesmen—pool what each of them earns, whether the earnings are equal or unequal and whether their crafts are the same or different.

2. Unrestricted partnership (shirkah al-mufāwaḍa): the partners share whatever profit either of them realizes and are jointly liable for every debt that may arise.

3. Credit partnership (shirkah al-wujūh): two reputable merchants join so that each buys goods on deferred payment for their joint account; when the goods are resold, any amount obtained above the purchase price is divided between them.

All three of these arrangements are void. The valid form is the capital partnership (shirkah al-ʿinān).

For a capital partnership to stand, wording that expressly grants permission to transact is required; if they limit themselves to saying, “We have partnered,” that is—according to the sounder view—insufficient. Each must be legally competent both to appoint an agent and to act as one.

The partnership is valid with fungible property but not with non-fungible goods; another opinion confines it to coined money. The two capitals must be mixed so thoroughly that they are no longer distinguishable, and mere mixing is inadequate when the items differ in kind or quality, such as sound coins with clipped ones. This applies when each partner contributes capital and then executes the contract. If they already own property jointly—through inheritance, purchase, or otherwise—and each authorises the other to trade with it, the partnership is thereby completed.

A recognised device for forming a partnership in merchandise is for each party to sell a portion of his goods for a portion of the other’s goods and then grant him leave to trade with it.

Equality of the two capitals is not required, yet the sounder opinion stipulates that their respective amounts must be known at the time of contract.

Each partner is empowered to transact provided no harm ensues: he may not sell on credit, nor for a currency other than the local one, nor at an excessive loss; nor may he travel with all or part of the capital without permission. Either partner may dissolve the partnership whenever he wishes, and once it is revoked both are dismissed from acting. If one of them says, “I dismiss you; do not transact with my share,” only the dismissed partner loses authority, whereas the one who issued the dismissal remains authorised.

The partnership is dissolved by the death of either partner, by insanity, or by loss of consciousness. Profit and loss are apportioned in proportion to their respective capital contributions, whether their labour is equal or not; if they stipulate otherwise, the contract is void and each partner merely recovers his original capital.