Friday, March 1, 2024
No menu items!

Business dispute between partners

Fatwaa ID: 1326


Zaid Amr and Bakr started a logistics business together. Of the total principal, Zaid and Amr invested 50% each. Bakr did not invest but he was made in charge of operations. Hence the profit was agreed to be split in the following manner: 25% for each Zaid and Amr, and the remaining 50% for Bakr.

They bought a truck with the principal amongst other things and, as was previously understood, Zaid began driving and doing deliveries.

After a while, Zaid decided that he wanted out. He approached Amr and Bakr and asked that they return the principal he invested. Amr and Bakr not only said no, but went further to say that in fact Zaid owes them. They reasoned saying, because you were an inexperienced driver, we weren’t able to make a deal with so and so company as they wanted someone experienced to deliver their product. If that deal were to go down, we would’ve made such and such amount. Since the deal didn’t go down because of you, you actually owe us that amount. That is why we will count your investment towards that “loss” of ours and you need to pay us what remains.

(Note: Amr and Bakr knew before they started the business together that Zaid was an inexperienced driver.)

The question is that is it right of Amr and Bakr to hold Zaid accountable for the deal that didn’t go down, and make up for that “loss” by not giving back his investment?

بينوا توجروا، أحسن الله بكم.

In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

We take note of the details of your query. We wish to remind you that barakah and khayr will only be found when partners remain honest and truthful and ensure that their dealings are Shari’ah compliant. Allaah Ta’aala is ever watchful. Should any partner oppress another partner, he will have to pay it back in the Hereafter.

  1. The “loss” from a possible deal is irrelevant and cannot be taken into account nor can anyone be held accountable. There is no guarantee that the deal would have been profitable even if the most experienced person was driving. Loss and profit is from Allaah Ta’aala. In the enquired situation, Zaid cannot be held liable for a deal that did not go through nor can any amount be demanded from him.
  2. Should Zaid wish to come out of the partnership, he may sell his share to one of the other partners, or to someone outside provided that the other partners agree. Zaid is not entitled to receive his capital. That was an investment. He is entitled to receive a fair share of his equity in the company should he sell his share. The company will be in evaluated and the total will be assessed from this. This total may be more or less than the amount he had invested.
    Should the partners be unable to buy out his share, the company will have to be dissolved. In such a case, the funds available after dissolving will be distributed according to the equity ratio of each partner.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين


Darul Iftaa New York answers questions on issues pertaining to Shari’ah. These questions and answers are placed for public view on for educational purposes. The rulings given here are based on the questions posed and should be read in conjunction with the questions. Many answers are unique to a particular scenario and cannot be taken as a basis to establish a ruling in another situation. 

Darul Iftaa New York bears no responsibility with regard to its answers being used out of their intended contexts, nor with regard to any loss or damage that may be caused by acting on its answers or not doing so.

References and links to other websites should not be taken as an endorsement of all contents of those websites. 

Answers may not be used as evidence in any court of law without prior written consent of Darul Iftaa New York.