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Stipulating a specific amount of the profits in a partnership

Answered as per Hanafi Fiqh by Muftionline.co.za

Q: I give 500 000 to a factory owner and every single month he gives me 30 000. It’s not like a partnership but just like an investment. Is that 30 000 halal or haram? Conditions is that if there is some loss in the factory, for example fire then we both will be responsible for the loss, meaning 500 000 will be gone in that case.

Bismillaah

A: It is not permissible to stipulate a specific amount of the profits. If a specific amount of the profits are stipulated, then the money earned will be interest. You should make sincere tawba to Allah Ta’ala for entering into an interest bearing investment and immediately end this haraam investment. The correct method of entering into a partnership is that the profit sharing be stipulated according to percentage. For example one partner will receive 40% and the other will receive 60% of the profits.

And Allah Ta’ala (الله تعالى) knows best.

Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)

This answer was collected from MuftiOnline.co.za, where the questions have been answered by Mufti Zakaria Makada (Hafizahullah), who is currently a senior lecturer in the science of Hadith and Fiqh at Madrasah Ta’leemuddeen, Isipingo Beach, South Africa.

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