The majority of scholars regard partnership as an independent contract under Islamic law, conferring upon each partner rights that he would not have without it, as in profit-sharing investment partnerships. Others recognize only joint ownership and the contracts associated with it, and thus prohibit most forms of partnership that people need, such as unequal shares of profit despite equal capital contributions, credit-based partnerships, labor partnerships, and others. The majority’s view, however, is more correct.

When two people enter into a partnership, each acts on his own behalf by virtue of ownership and on his partner’s behalf by virtue of agency. Whatever contracts he concludes, he concludes for himself and his partner; whatever property he takes possession of, he receives for himself and his partner. When people know that they are partners and entrust their property to them, this is regarded as permission for either partner to authorize the other to act.

The ruler has no right to prohibit contracts and acts of taking possession of this kind, which the majority of scholars permit and upon which people’s interests depend. Moreover, prohibiting all of them is untenable under Islamic law, while singling out some for prohibition is arbitrary. And Allah knows best.

He was asked:

About a cost-plus sale in which the seller discloses his purchase price but does not inform the buyer that the original purchase was on deferred payment: is this lawful or unlawful?