The Precepts of Partnership
2170. Partnership is defined as the ownership by two or more persons of a property—be it particularized or abstractly defined—as an abstract fraction of the whole, such as half, one-third etc.
Partnership can be realized through various causes. It can be realized by a non-volitional cause, such as inheritance, or a volitional cause. The volitional cause may be a corporeal act, such as the case wherein two people take possession of a property together, or a contract, such as a case wherein two people who own two separate properties, exchange an abstractly defined fraction of their property—for example half of it—with each other through a sale or a compromise.
Partnership can also be realized through the amalgamation of two properties, whereby they are no longer distinguishable from each other, be they both of the same kind or of different kinds.
A contractual partnership—whose rulings are being discussed—is defined as a contract between two or more persons over an enterprise involving a commonly owned property, wherein the profits would belong to each of them, just as the losses would also be borne by each of them.
2171. If two or more persons become partners in the wages that they acquire from their work, such as a case wherein a few workers mutually agree to share any wages that they earn, their partnership will not be valid. However, if they come to a mutual compromise, such as exchanging half of one’s wages for half of the other party’s wages for a specified period, and the other party accepts, they become partners in their wages.
If it is stipulated within a binding contract that each one of them will—for example—give half of his wages to the other, then even though they do not become partners, it is obligatory upon each of them to act according to the stipulated clause. The same ruling will apply if the clause is stipulated within a non-binding contract, for as long as the contract has not been cancelled.
2172. If two people agree to become partners on the terms that each one of them would buy a commodity on his own behalf, and, himself, be responsible for paying its price, but that they would be partners in the use of the commodities that they have bought, then such a partnership is not valid.
However, if each of them deputizes the other to buy on his behalf an abstractly defined fraction—such as half or one-third—of the abstractly defined commodity that the other person is buying, be it on immediate or deferred payment, and thereafter each partner buys the commodity for himself and also on behalf of his partner so that each is responsible for the amount owed, the partnership will be valid.
2173. The individuals who wish to become partners through a contractual partnership must both be sane and b¡ligh. They must also enter the partnership of their own intention and volition, and possess the right of disposal over their property. Therefore, if a feeble-minded person—defined as one who uses his property in futile ventures—enters into a partnership, it will not be valid, because he does not have the right of disposal over his own property.
2174. If the partners stipulate within the partnership contract that the one who does the work, or who works more than the others, or whose work is of greater value than that of the others, should enjoy a higher share of the profits, then they must give the stipulated amount to him. However, if they stipulate that the one who does not do any work, or who does not work more than the others, or whose work is not of greater value than that of the others, should enjoy a higher share of the profits, the condition will not be valid. Nevertheless, if they stipulate that the extra amount be placed in his possession, the condition will be valid and they must fulfill it.
2175. If it is agreed that all the profits should be given to one person, or that all the losses should be borne by one person, then such a clause is void and the validity of the contract is also questionable. However, if it is agreed that one would give the other from the property that is profited, or would place in the other’s possession an amount that is equivalent to the entire loss incurred by him, the contract will be valid and it will be mandatory to fulfill the condition.
2176. If it is not stipulated that one of the partners would take a higher cut of the profits, then if the capital invested by each partner is the same, they will enjoy the profits or bear the losses equally. However, if their invested capitals are not equal, then they will have to divide the profits or losses in proportion to their capital. For example, if two people form a partnership, and the capital invested by one is twice of that invested by the other, his share of the profits or losses will also be twice that of the other’s, regardless of whether they both work equally, or one works less than the other, or one of them doesn’t do any work at all.
2177. If it is stipulated within the partnership contract that the partners would carry out the sale or the purchase together, or each of them would individually carry out the transactions, or only one of them would carry out the transactions, then they must act according to the agreement.
2178. If the partners do not specify which one of them would carry out the sale or the purchase with the partnership assets, none of them can carry out a transaction without the consent of the others.
2179. The partner who has been vested with the right of discretion over the partnership assets must act in accordance with the partnership contract. For example, if it has been agreed with him that he would buy the commodities on deferred payment, or sell it on immediate payment, or that he would buy the commodity from a particular place, he must act in accordance with these conditions. However, if they do not place any conditions on him, he should carry out transactions with it in a normal manner. He should also not carry the shared property with himself on a journey, if it is not conventional to do so, or if it endangers the property.
2180. If the partner who carries out transactions with the partnership assets, carries out a sale or a purchase that is contrary to the agreement that was made with him, the transaction with respect to the share of the other partner will be uncommissioned. In the event that he does not consent to it, he may reclaim possession of his very property, or in the event that it has perished, its replacement.
The same will apply to the case wherein no agreement exists, but the partner carries out a transaction with the assets in a manner that is not normal.
2181. The partner who carries out the transactions with the partnership assets is not responsible for the loss of a part of the assets or its entirety, provided he has not been immoderate, nor been negligent in safeguarding it.
2182. If the partner who carries out transactions with the partnership assets claims that the assets have perished, and swears in the presence of a ¦¡kim al-shar’yy, his word must be accepted.
2183. If all the partners in a partnership withdraw the discretion of disposal that they have granted to each other with respect to their property, none of them will have the right of disposal over the partnership property. In the event that one of them withdraws his consent, the rest of the partners will no longer be vested with the right of disposal. However, the one who withdraws his consent is permitted to exercise the right of disposal over the partnership property.
2184. Whenever a partner requests that the partnership assets be divided, the rest must accede to his request, even if a particular period has been fixed for the partnership, unless the act of division necessitates the supplementation of another property from other than the commonly shared property, also known as the remainder, or if the act of division entails a significant loss for the partners.
2185. If one of the partners passes away, becomes insane, or becomes unconscious, the remaining partners do not have the right of disposal over the remaining property. The same will apply if one of them becomes feeble-minded—defined as a person who wastes his property on futile ventures—or is interdicted from disposing his property by a ¦¡kim al-shar’yy due to bankruptcy.
2186. If a partner buys something on deferred payment for himself, the profit or losses borne from it belong to him. However, if he buys it for the partnership, and the absolute nature of the partnership allows for transactions of deferred payment, the profit and losses will belong to the partnership. The same will apply if the partnership contract does not cover transactions of deferred payment, but a partner buys it for the partnership nonetheless, and the other partners later consent to it.
2187. If a person carries out a transaction with partnership assets, but later realizes that the partnership was not valid, then if the situation is such that the permission to carry out the transaction is not contingent on the validity of the partnership—in the sense that had they known that the partnership is not valid, they would have nonetheless consented to the transaction—the transaction will be valid. In such a case, anything that is acquired from the transaction belongs to each and every one of them. If it is not such, then if those who had not consented to the right of others to dispose of their property, consent to the transaction, the transaction will once again be valid. In the event that they do not (consent to it), the transaction will be invalid.
In any case, a number of the jurisprudents (may the Lord raise their status) have stated that any partner who has worked for the partnership, without the intention of working for free, may claim wages for his efforts at the normal rate, in proportion to the shares of the other partners. However, what is apparent is that in the absence of their consent, he does not possess the right to claim any wages, and in the event that they do consent to it, to say that he reserves the right to claim wages is problematic. The more precautionary course of action is a compromise.