a man who makes an advance payment to two men on condition that each guarantees the other’s liability. This is permissible because it involves no contractual uncertainty. In partnerships based on mutual liability, however, the very purpose is for each partner to guarantee half the liability arising from whatever the other purchases without his permission or knowledge. This involves the gravest contractual uncertainty.
The Book of Invalid Sales prohibits an arrangement involving less uncertainty than this: two men selling their respective commodities to one man on condition that each guarantees the other’s liability. This is impermissible because neither knows the extent of the liability he assumes on the other’s behalf: one man’s commodity may be claimed by its rightful owner while the other’s is not. If either commodity is so claimed, the amount recoverable under the guarantee remains unknown until a valuation is made. Moreover, the two sellers were not joint owners of what they sold. In partnerships based on mutual liability, neither partner knows at all the extent of the liability he assumes on the other’s behalf, since he guarantees whatever the other purchases without his permission or knowledge.
Some have regarded this ruling in the Book of Invalid Sales as conflicting with the ruling in the Book of Partnerships permitting two men to purchase a commodity on credit on condition that each guarantees the other’s liability. They base this on the explanation given for the ruling in the Book of Invalid Sales: the purchaser buys from one seller only on condition that he guarantees the other’s liability. Thus, he buys from the solvent seller on condition that the latter guarantees what the other owes him. Yet, in the case in the second Book of Advance Sales, he likewise makes an advance payment to one of the two only on condition that he guarantees the other’s liability. Thus, he makes an advance payment to the solvent party on condition that the latter guarantees what the insolvent party owes him.
The correct view is that these rulings are not inconsistent. The distinction is that, in the case in the Book of Invalid Sales, the two sellers, each guaranteeing the other’s liability, were not joint owners of what they sold, nor did either know the extent of the liability he assumed on the other’s behalf. In the case in the Book of Partnerships, the two purchasers, each guaranteeing the other’s liability, jointly own what they purchase, and each knows the extent of the liability he assumes on the other’s behalf. Likewise, in the case in the second Book of Advance Sales, the two recipients of the advance payment, each guaranteeing the other’s liability, jointly own the dinars constituting the advance-sale capital, and each knows the extent of the liability he assumes on the other’s behalf.
The governing principle, therefore, is that when two guarantors each guarantee the other’s liability, this is permissible if they jointly own what they sell or purchase; otherwise, it is impermissible. Accordingly, if two men sell a commodity to one man on condition that each guarantees the other’s liability, this is permissible because they jointly own it and each knows the extent of the liability he assumes on the other’s behalf. This applies whether their shares in it are equal or are not