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Profit share in business

Fatwaa ID: 651


What will be the ruling of partnership in business. For example, if two persons are in partnership, they agreed on a certain amount of profit on a certain product, let say £30 profit margin.

Now, if the one (partner) selling the product sells it at a higher price and make a profit of £40 without the other partner knowing. Does he have to inform or/and give the other partner a share in that, or he can suffice in sharing to him the agreed profit which is £30?

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

In principle, it is necessary to agree upon a profit split ratio when entering into a partnership. Irrespective of how much the profit is, that percentage will be used for distribution. In the enquired situation, any profit derived from selling the product will be split between the partners in accordance to the agreed ratio. It is haraam for one partner to conceal any profit from the other. Both partners in the enquired example are entitled to their split of the £40. When one partner sells or does something, this is on behalf of the other partner(s) as well.

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

08/01/1444 AH – 02/21/2023 CE | AMG3-3394

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين


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