Fiqh of Transactions #16 – Partnership and Companies

Hatem al-Haj

Channel: Hatem al-Haj

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To proceed so today as we saw last time inshallah we will go over corporations or companies or partnership Sarika.

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Okay, so partnership Corporation company,

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we will talk about chemistry cat or the rulings of partnership.

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Before we do

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this is an area where so much has changed in sort of

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the world that we live in the shredded carrots are the companies that are familiar with and that are addressed very different from the companies that we have now. Even the names of the companies they talked about are pretty different from the names of the companies we have now. It's not just about names, it's about realities, also, things are a lot more complex now.

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which requires

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with a great effort on the part of the the contemporary folk,

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to basically

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take those rulings, those individual rulings, those particular rulings, to a higher level of abstraction to

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be able to extract from those rulings have a higher level of abstraction, the theory, the philosophical Foundation, behind those rulings in order for them to come down to a lower level now particularization and address the particular rulings of our companies, you can't really do simple drafting

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rulings from the companies that they talked about the companies that existed 1000 years ago, and the companies that we have now, you really need to be familiar with the the effective causes behind those rulings, the heckum Also, sometimes the wisdom could be nonverbal, it could be measurable, quantifiable, discernible enough, that our understanding of the hekima will help us in the application in the mother application of those rulings. So, this is important.

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In order for the rulings or the Sharia to be viable, we really have to engage in this exercise all the time, particularly, when it comes to matters that have seen a lot of changes.

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Having said that, it is important also that I would say that I would add to this that this requires a very high level of expertise and specialization, a very high level of expertise and specialization, that that will do this need to be specialized need to be very familiar with

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financial transactions,

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it would be even better if they have a degree and in these particular fields or disciplines. So we will mention

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we will mention in our discussion, particularly when we come to

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crossing the bridge between antiquity and modernity and in our discussion of modern companies we will mention a lot a

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hi fi chance, which is called the up and up is basically an abbreviation for accounting

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and auditing

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organization

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for Islamic,

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financial

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and institutions.

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And that would be translated in Arabic into

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you know, an Arabic That would be translated into

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Hi at Maha Sabha while Moraga Mr. satin Maria Islami.

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So it's based in Bahrain and

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you know, there are many that

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are on the board of this particular of this organization, what they do is basically they review contracts and establish test standards. That's why the their their output comes out in the form of standards, my ears, they call them in my ear to suraiya

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juridical standards or shodai standards.

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They are sort of sort of the the most specialized that that I can think of.

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And the hire is made out of significant fuqaha That does not mean that they are the only folks that understand about financial transactions, but the they are the folks that understand about financial transactions.

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So that's why we give attention to other standards.

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Although they would not be they will not take the power of consensus and they are not the final say they are very significant. They're they're very significant and they have

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place in our understanding of the financial, contemporary financial transactions.

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So that's IO fi, that's an introduction to Opie the The other thing that I wanted to say is that I don't have that expertise in contemporary financial transactions. So I will be mainly addressing shadow capitalism African Islamia will be mainly addressing the companies that are

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known in in classical and traditional classical.

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I will be mentioning some of the rulings of modern companies and some of the modern applications, particularly the philosophical foundation from which we extract those modern applications.

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But don't count on me as an expert in this particular field because I'm truly not and this is not out of humbleness or anything, it's just like

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effect.

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So, we will be mainly focusing on this the classical aspects of the of the rulings.

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So, we will go over what I said here in the chapter and we will try to

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basically take the rulings to that higher level of abstraction, so that we can thereafter understand when the scholars that are specialized in contemporary financial in the fact of contemporary financial transactions, we will try to understand where they coming from what they're talking about. When the the basically the analogy is not that exact between modern companies and

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classical companies or corporations. In fact,

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Imam cfml Kodama, Rahim Allah said in his book along the

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under the chapter of a Shetty care bubble sciatica, where chapter on partnerships and companies he said,

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our body our group, and that's basically to the you know, if you give a title to this and I gave a title in the book and well sorry, cater to the types of partnerships, he said what he thought about the outro but there are four types shatta keturah, in any way any study can be male or female or better than a Hema.

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The first type is right and full rein partnership this this is partnership with money and effort, basically capital and labor, partnership of capital and labor.

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So, now he will talk basically about the types of aesthetic add for the types of partnership. But because this is a manual, he does not go into you know, the small details or

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sometimes he does not address the you know, manual is a manual the manual is a short

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text. That does not really that's not really comprehensive

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but it is an important primer for the student.

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And we are expanded a little bit. So, this is like an intermediate level type of class.

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So, we are going beyond the scope of the manual a little bit.

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So, she started to talk about the different types of study Catherine had mentioned mentioned four types of study who said accounts or corporations but have at a higher level there are two categories of Sarika there is dedicated milk and Shannon katalog study

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heldman

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and study got

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hella chatty kitten Medicare's basically co ownership co ownership

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it is basically a partnership and property milk is property milk is ownership. Milk is ownership it means partnership and property.

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And partnership and property is basically two or more people. The definition of static as you know, struck his main effects and how to solve it is basically when two people

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the partnership of two people in an entitlement or authority legal capacity. So they get capacity will be here entitlement will be here. This is ownership. Let us say that we bought a building together, you paid some money, I paid some money, and we purchased the building together. Now we co own that building, we are Shoraka we are partners in that building. Now let's say we inherited money both of us inherited money together we co own the whatever state or the ranch or the building or so we call own things. And that corner ship is a form of sciatica. It's a form of partnership. But in that form of partnership, there is no wirkkala between us and there is no kapela between us. In

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other words, you are not my agent and I'm not your agent. In other words, you are not liable for my actions.

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And I'm not liable for your actions or transactions. So we just basically comb this building, but we do not represent each other. We do not represent each other in this type of partnership, which is the partnership which is contractual partnership, that means contract.

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And so it can mean static.

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So its partnership, its contractual partnership. There are two criteria here there are two basically

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foundations for this partnership. It is comprised of part agency and part the monarchy Fela part agency, meaning that we represent each other it's what Kayla? You know, last time we talked about it Ocala right. And prior to this, we talked about guaranteed, which is the man, right? So and we're Ghana and the fella or the man

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that the concept of sciatica is comprised of these two concepts. It's what gather it is agency. It is a fella, it's guarantors. So, we are we are representing each other, like whatever you do, you do it on your behalf on my behalf, or on behalf of everybody who is a partner. So that is what Gallaudet's agency, we each one of the partners does have that legal capacity. And then because we do things on behalf of each other, then the the other concept also in SCADA is we basically covering each other, we're liable for each other's transactions, and that is why we are partners. So in static settlement, that is not the case. We don't represent each other and we are not liable for

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each other's actions. you own your part, I own my part and that's it. So co ownership or settlement, let us remove this because this is not going to be what we will focus on in this chapter. In this chapter. We are focusing on strategy catalogs or contractual partnership. And then the CFO starting to talk about the types of contractual partnerships.

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And let us say

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before, before we before we get to what the SEC said he would mentioned four different types of partners because he probably

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He was not convinced that Nevada is is another type of partnership, the the there is controversy within the Hanbury madhhab about Nevada.

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So maybe we make a table, make a table and then mentioned.

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Okay, so

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partnerships.

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So the order that the shapes use the year is I Nan will do modaraba and have them and

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would you

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modaraba.

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And then

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so I Nan hai translated this into full reign partnership

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would you will be, let's say credit partnership.

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modaraba is usually translated as profit sharing.

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It's actually another classical partnership.

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But is usually translated as profit sharing, but it's a form of investment financing, not necessarily a partnership in the classical sense, that's why some of the scholars

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actually sorted out separate modaraba from the rest of partnerships, they give it a chapter by itself, and then have then which is you know, in some, in some will be called the Son of Man or whatever it is labor,

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labor partnership,

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and then move forward. The chief did not mention,

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which is just full of authority partnership, and we will come to it.

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So I nn

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is for rain will do is credit modaraba is profit sharing, then as labor. When we talk about partnership, we're talking about some people embarking on a venture a business venture and endeavor to make profit, right?

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How do you make profit, like you make profit

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islamically you can make profit

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by contributing capital,

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capital,

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labor

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or, and this is a little bit controversial. At the root of it, it's capital or labor, because the man the man, which is liability, being liable, goes back to contributing capital and labor. And that is this would you her credit partnership that we will talk about now. So you either contribute capital labor, or you you assume liability and because you assume the liability, then you're entitled to some profit. And this is the would you which the medic is would call them

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then on par connection, credit partnership, so the sex of the year,

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because he will just give definitions and he will just move on. So we are really expanding on what the sex because this is an important chapter. So he said sharika to the nanoha anesthetic, I'd be mad at him about that. Hmm. And then or full reign partnership, this is partnership with money and effort. This is partnership with money and effort. So in Shani, Canada, inand we're putting what's here, you know, we're putting money.

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last effort.

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And you know, the other partner, other partners, everybody is contributing, contributing money plus effort.

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Everybody's contributing money and effort. That is why it is called a Nn. Partnership. That is why it's called the nn partnership. Why nn is the bride of the horse. So it like it is as if the partners are like the bridles of horses in a race that are next to each other. So they're equal in every regard. They're all contributing both capital and labor, money and effort,

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money and effort

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Or capital and labor. So they're like the bridles of the horse.

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And this is the mostly classical type of partnership, this is the essence of partnership shalaka dynamic is the essence of partnership and sharing capital N is is

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agreed upon by the formulas. So

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we can say that sharika Diane is accepted by the canopies, Maliki's Sharpies and bellies.

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They disagree over details. So certainly when it comes to details that will disagree. But in,

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in concept, Chateau Catalina is agreed upon this is the essence of partnership, this is the most classical form of partnership.

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Then he said, What shall we do any study? study? Can female study mbj? Emma, would you all credit partnership partners started to the business using their standing on credit, they use their reputation, they don't have money to people, they don't have money at all. They say let's start a company. Let's start a business. We have a good reputation in the market. We have good credit. Now good reputation and market we have good credit, let's go buy things and sell them and share the profit.

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So why do you need do they need to do this together? Because they synergize you know, whenever you have a part of the wisdom of

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steady cap in general is that the center's eyes each other they support each other, they

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strengthen each other when they come together. And you know,

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the concept of sciatica is we didn't start by saying this but it is in your document. It's agreed upon the concept of cherica is permissible.

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They mentioned the brand is and Sam used to be the partner of the Prophet sallallahu Sallam before Botha. And when the Prophet sallallahu Sallam when he came in exile when he accepted Islam and came to the prophet SAW Southern thereafter, during the year of Mecca, the Prophet sallallahu Sallam said my husband, he can ally with Daddy, Daddy, welcome my brother and my partner, or partner that's before Islam. You see how the how faithful the prophet of Saddam is as a man who used to be his partner, but he did not come to him and accept Islam except during Mecca, which is you know, how many years that was like 21 years after capitalism started, you know, his ministry,

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but then the province of Southern recognize them and he said Welcome my brother and partner, Kevin, a daddy, whatever marry, he did not use to

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you daddy and humanity he did not used to be argumentative.

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For

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eternity is to conceal and hide or to argue in this field. So he mentioned some of his good qualities as a partner.

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So, in addition to this, there is a hadith reported

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in recorded by the wooden tirmidhi and others from the Alon who were Saudis Potsie in which the Prophet sallallahu Sallam relates from a lot of he said, and I said it to Sheree, Kadena madami, Adama Sahaba, who favor Karna who courage to meet a man. And I said it. Again I am the third of the two partners is Allah mucuna huduma Sahaba, who, as long as none of them betrays his partner, for his

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courage to maintain him. So once one of them betrays his partner, I will leave the partnership, I would come out from the partnership or leave their partnership. And that that is that's an important concept that we have to remember, because to understand the technicalities of the law

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does not is not sufficient, unless you understand the spirit of the law. So at the root of it is that you should be transparent led to that electromagnetic should not be argumentative, you should be transparent and you should not betray your partner in any way, shape or form. And if that is the spirit that you're coming into the partnership with, that you will be transparent and that you will be responsible that you will not be argumentative will be easygoing, some, some honey about some honey, the star

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Some honey, the honey of October, you'll be some meaning easygoing, and your transactions transparent. And you never hide, you never can see you never betray your partner. inshallah even if you don't understand the technicalities very well, inshallah we'll be okay. And then you can learn on the job and try to improve your knowledge of the law. We're not making light of the law, it's extremely important, because that is how we protect those values. That is how we protect the values at the root of

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our religious practice and religious commitment. So

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but but the the basis of this has to be the moral basis, the moral basis of accountability, transparency, responsibility, brotherhood, you love for your brother or sister what you love for yourself, and then we try to understand the law in order for us to perfect our practice, and to do it in a way that's most pleasing to Allah subhanaw taala. So, we said that we'll do a partnership or credit partnership is another form of partnership, these people these are people who do not have

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who do not have money, they went out and they decided to basically use their credit. So it is credit plus, so it is credit versus credit, you contribute credit, I contribute credit, you know, but keep in mind that this is credit and labor, because we will take this stuff and do something with it. So you want to add labor here

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and labor here. But the capital of the company is is basically the credit that we have.

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And because there is no XML, because there is no capital, you know, when we started this partnership, there is no capital, there is no smell in this company, this form of company was rejected by the medic ease interface, the medic is are basically, you could say that they're comparable to the combat is in their flexibility with partnership. They're very flexible with partnership, they're, you know,

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basically the easiest, easiest,

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or the most flexible partnerships.

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opposite to the sapphires who are very limited

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or strict in their sort of

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partnership.

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But the Maliki's came here and said no, we will have to put a stop here. This is not a partnership. It's not doesn't work, they don't have a capital to begin that venture. And the fact that they're only that they're sharing liability liability is not something that is measurable is not something that you sell or buy. It's not something that can be used as a capital to start a venture. So the medic is not accepted us. The shop is not accepted us. So at the end of the day, this is only accepted by the harpies and handed is only accepted by the handpiece and the hunt buddies.

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In this partnership, the ham bellies were so flexible that they allowed just like so many things.

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So the ham bellies, we will allow them to do this. And we will allow them to agree on their shares.

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Why why or what why is it important that they agree on what they will own? So we're going out with now to buy stuff to we're going out to buy stuff. We don't have money, you know, we're gonna buy stuff on credit. And then the stuff would be mixed.

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But who's entitled to it? How are we going to divide? How are we going to divide the profit? Keep in mind that in partnerships in general, particularly how many ways

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and hanafy as well, in partnerships in general.

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There is a golden rule, which is

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when will the man rape holla Takata.

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So profit,

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aka profit will be in accordance with or according to their agreements will be the

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Divided divided

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according to their agreement matter

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what the other agreed on

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So, profit will be divided according to their agreement one while the other I said man and this is reported the meaning of this as reported by a few months off of Navy Sabre in Santa Fe and a ba ba from Colorado, what about Liana Russell man

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and that part while they are that I said Ma'am, is a matter of consensus, which means what loss and what is loss

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I said mal will be the loss of the capital will be the responsibility of the capital. So loss will be the responsibility or the loss of the capital

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on the capital

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Okay, that goes that you know, how many ways that works in all forms of partnership

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all forms of partnership and then we when we will come to, to address like, one technical exception, but it may not be an exception.

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Why is it that we are saying that Parliament Africa,

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which means that the profit will be divided according to the agreement, because you could be more skillful than me.

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So, in any partnership, where labor is involved, labor is involved, effort is involved, you could be better than me. Therefore, it would be unfair to to divide everything half and half 5050. If you're better than me, here, the combat is also said, you could be more creditworthy than me more creditworthy than me you have a better reputation in the market, you can get more stuff. So now they can agree.

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According to the company's they can agree in this partnership, to divide to divide the profit 5050

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or 7030,

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or whichever way they want.

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Okay, now,

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do they have to divide the profit on the basis of liability? No, they don't. And that's also another flexibility here. That is offer. That kind of is don't offer that flexibility. So if he if you say that I will be liable for 50% of the merchandise, he will be in my demand and my liability 50% of the merchandise

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and you're liable for 50%, we still can divide the profit 5050 or 7030.

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Because there is some labor involved here. And there is some effort involved here. So our agreement to be for me to be liable for 50% you liable for 50% does not mean that when we go out to the market to buy stuff, I will be able to get the you know, you know what, the same amount of merchandise that you can get because you could be more creditworthy. In addition to this. This partnership is not only about purchase, it's also about going out and selling those things, and you could be a better salesperson. So in this case, we could agree that you take 70 and I take 30. But when it comes to loss, how do we divide the loss who's responsible for what when it comes to loss, we will have to

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basically divide the loss based on

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our liability.

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So if I was liable for 50% and you're liable for 50%, but we agree that I take 70% of the profit and you take 30% of the profit.

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If we lose the money, since we agreed that I will be liable for 50% and you will be liable for 50%

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I will be shoulder one half of the loss you will shoulder what happened the last 50% of the loss and 50% of the loss

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that loss will be divided 5050

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okay

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now

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We and we and we will come at the end and try to bring all of this up to a higher level of

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abstraction. Maybe we can even spell this out from now

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had the end of this year remember and the chapter of you, I told you that there are three big things that we have to avoid in financial transactions.

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One of them is arabba.

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One of them is rara, which is excessive risk taking or excessive speculation.

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And one of them is Robin which is in equity.

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So, this is the highest level of abstraction, this is the highest level of abstraction had a lower level of abstraction.

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When it comes to a shadow cap in particular, when it comes to the Shadow Cabinet in particular, we want

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what

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I want to get this out of the way I don't know

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I should not get it.

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But when it comes to the Cheshire Cat in particular,

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we want to avoid

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or basically lack of transparency.

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data means ignorance like we want to avoid.

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Anyway,

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we want the capital and the profit have to be agreed on. So we want to avoid any

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lack of transparency

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and ambiguity Oh thank you, thank you, we want to avoid any ambiguity and you know remember like you're like that. So,

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we want to avoid any ambiguity and the capital which is the man or the rep

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which is the profit. Therefore, the capital has to be known and the profit has to be known and I will come back and talk go back to the nn and talk about how the capital has to be known and the profit has to be known. So we want to avoid Jayla, we want to avoid ambiguity.

00:37:44--> 00:38:03

Avoid an ambiguity when serve which cause this one here excessive risk taking, we want to minimize God, we want to minimize excessive risk taking. So, everything needs to be clear and transparent. We have to agree on the capital, we have to agree on the profit

00:38:06--> 00:38:17

at the at the inception of the company, we have to agree on the capital and we have to agree on the profit. So here in Saudi Katonah, which is the essence of companies and Islam

00:38:18--> 00:38:23

had the inception, there is capital and there is profit.

00:38:25--> 00:38:26

And

00:38:27--> 00:38:28

this capital

00:38:29--> 00:39:02

has to be according to the combat is and you know the majority this capital has to be in the form of currency. It cannot be in the form of merchandise or other forms of property cannot be 100 it has to be not it cannot be hotter than currency has to be currency. However, the Maliki's and that's also a position within the Hanbury must have this less popular allowed the capital to be property. So, let us say

00:39:05--> 00:39:06

let us say that

00:39:08--> 00:39:18

I am a theater and I have a sewing machine and you are at Taylor and you have what other machines that you use

00:39:21--> 00:39:22

there is one thing then

00:39:23--> 00:39:24

serger

00:39:25--> 00:39:25

embroidery

00:39:27--> 00:39:59

embroidery machine okay there is one of the something like this and then you you bring your machine I bring my machine This is the capital of the company this is the capital of the company. Now the majority that did not allow this, they said that we were not going to allow this the capital of the company has to be not has to be currency. Why? Because the currency is currency and then at the time of dispute we you know, everybody contributed this or the Maliki said why don't we value the the

00:40:00--> 00:40:23

Why don't we estimate the value of that property and that property and if we agree on the estimates, then that is the capital you're providing. And that is the capital I'm providing the majority of contemporary scholars that allow this now, it's the market position and the weaker position in the hungry mouth, but that is not the height of your chapter

00:40:24--> 00:40:33

or even the how many positions authorized company position, so capita in this case can be property or currency, currency by agreement, all of them agree,

00:40:35--> 00:40:39

property a little bit controversial and then

00:40:41--> 00:41:09

when it comes to the profit, we have to agree on the profit, we have to agree on the profit, the profit here, can the profit here be divided, not in proportion to capital, that somebody said yes, the profit can be divided here, not in proportion to the capital, because there is labor involved. And it could be you know, we're we don't have you know, there's so, they allow this

00:41:11--> 00:41:18

and in and then in particular, the majority would would, would allow this at least two other four

00:41:19--> 00:41:20

would allow

00:41:21--> 00:41:59

that we divide the capital on the basis of the profit at least the embellies and the HANA fees would allow that we divide the capital, we divide the profit and not strictly on the basis of the capital not strictly on the basis of the capital. So, if we contributed 5050 in terms of capital, I can get 70% of the profit you get 30% of the profit, when it comes to loss, the loss is always proportion to the capital, the loss is always and this is one of the most essential

00:42:01--> 00:42:11

rulings agreed upon no one argues about this. That's the essence of it. And why is it that the loss has to be always

00:42:13--> 00:42:19

has to be always proportion to the capital? Because in order for us to avoid that

00:42:20--> 00:42:26

we have to make sure we have to make sure you know we have to make sure that we remove all ambiguity

00:42:27--> 00:42:35

we have to make sure also we have to make sure also that there is no law vamana there are a

00:42:41--> 00:42:54

lot of monitor acid mal meaning that there is no protection or immunity for capital there is no capital immune to loss no capital is immune to loss

00:42:56--> 00:43:00

in the man here meaning guarantee no guaranteed capital

00:43:03--> 00:43:07

no guaranteed capital includes insurance.

00:43:09--> 00:43:11

What do you mean by insurance?

00:43:15--> 00:43:21

insurance is totally that it's a big story that we'll come to at one point

00:43:24--> 00:43:42

okay, well yeah, and then we will come to this now. When it comes to the salary salary partner, lava monitor, I said man, no guaranteed capital. That is one thing remove ambiguity no guaranteed capital. Another one

00:43:43--> 00:43:45

you're gonna have to get out of the way.

00:43:50--> 00:43:55

Another one here is learn to rock and roll.

00:44:03--> 00:44:08

Basically, we we have to ascertain ensure,

00:44:09--> 00:44:10

ensure

00:44:14--> 00:44:19

their partnership in partnership, the partnership in profit, partnership

00:44:21--> 00:44:23

in profit.

00:44:35--> 00:44:36

Larry

00:44:38--> 00:44:40

Hill, Bada we have

00:44:48--> 00:44:51

no profit, no profit

00:44:55--> 00:44:56

before

00:44:58--> 00:44:59

recouping the capital.

00:45:02--> 00:45:09

Before recouping the capital, we have, we can no profit before recouping the capital.

00:45:14--> 00:45:26

Okay, no ambiguity, no profit before recouping the capital, no guaranteed capital, we have to ensure there's the there is going to be partnership in profit.

00:45:37--> 00:45:54

there anything else? Well, we have to apply now the rulings that we are extracting here, we have to always go back and apply them to this level of abstraction, and then apply them to this level of abstraction. So we're saying here that the the capital

00:45:56--> 00:46:12

has to be in the form of currency, according to the majority, the medic is in a weaker position and company men have allowed this to be in the form of property. Where does this belong here, it belongs to remove of ambiguity, remove of ambiguity, there should be no ambiguity.

00:46:14--> 00:46:23

We're saying here that the profit has to be divided, that the profit has to be divided on the basis of

00:46:26--> 00:46:27

this this

00:46:31--> 00:46:32

manner, I'm yardman.

00:46:37--> 00:46:39

no profit.

00:46:42--> 00:46:43

Without liability,

00:46:46--> 00:46:50

no profit without liability, high ability.

00:46:54--> 00:47:21

Okay, that's it, when we will be done. This is the highest level of abstraction This is next to it. And then we will have to apply everything to those. So now, that the profit, we said we can agree on dividing the profit, but the loss has to be proportionate to the capital, if the loss is not proportionate to the capital, then what are we having, we're having

00:47:22--> 00:47:24

guaranteed capital.

00:47:25--> 00:47:28

And we could also be having

00:47:30--> 00:47:31

profit, you know,

00:47:33--> 00:47:35

no, the guaranteed capital.

00:47:36--> 00:47:46

Guaranteed capital is the one that we're violating here is the principle that we are violating here. So, if we agree, if we,

00:47:50--> 00:47:58

if we agree that, you know, the rip, the profit will be 70% 30%.

00:48:00--> 00:48:00

But as

00:48:02--> 00:48:07

one of the two partners, I am not going to be responsible for the loss,

00:48:08--> 00:48:59

I am not responsible for any losses, and that is not losses beyond the assets of the company. Because that's a different issue in modern companies, you know, limited liability versus not limited liability if you're going to be responsible for the losses in your private money or not, that's a different issue. But if we say that I'll contribute $200, you contribute $100 we divide the profit between us 70% 30%, but the loss would be all yours or the loss would be all mine, that is guaranteeing capital and you know, and that would be forbidden and that would be forbidden. So, the loss has to be proportion to the capital that was contributed, the profit does not have to be

00:48:59--> 00:49:08

proportioned to the capital, that was provided, why? Because the labor is not equal

00:49:09--> 00:49:40

$100 is equal to $100 you cannot make a distinction between the profit of this $100 and this $100 but my labor is not equal to your labor. Therefore, we could agree on different proportions when it comes to profit, when is it that we cannot agree on different proportions when it comes to the profit in the profit sharing

00:49:42--> 00:49:59

model, where it is capital provided by one side versus labor provided by one side. We can agree on profit sharing in the in different ways. But let us say that capital

00:50:00--> 00:50:02

was provided by two people,

00:50:03--> 00:50:11

capital was provided by two people, and they gave their money makes their money give them money to

00:50:13--> 00:50:13

person

00:50:14--> 00:50:16

to basically invest

00:50:18--> 00:50:21

in this case, I cannot

00:50:24--> 00:50:41

we cannot agree on profit, that is not proportionate to the capital, between the capital between between the capitalist and the labor, we can agree on a division 6040 2080 5050

00:50:42--> 00:51:18

between the two capitalists, the profit that will be the lot of the capital, not the labor, will it say the capitalists are entitled to 70%, we cannot define the 70% among us, as capitalists on the basis of a previous agreement has to be on the basis of the capital contributed. Why is this to avoid rep MLM yardman, to avoid making profit from without liability.

00:51:19--> 00:52:21

Because if we, if you, if you contribute $100, I contribute $100 and then you get 70% of the profit, and I get 30% of the profit, you made profit from my capital, which I was not liable for, you know it you realize what you were not liable for I was liable for? So, hear me out man, this is profit making it off of nowhere, not your capital, not your liability, you know, not your labor, where How are you taking the 70%? Why are you entitled 70% of the profit that the capital is entitled to when both of us contributed $100. And we were not working, we had a labor that was doing the investment. So yes, that labor we can agree with up labor on whatever division we want. Because, you know, we

00:52:21--> 00:52:51

could have a little capital and we could rely mainly on the work of the labor to invest it, in this case, the labor will get 70% then we will get 30% or we can have huge capital capital, we can have like each one of us contributes like $5 million, and we give it to a labor and we tell the labor, you invest it and you get 10% of the profit and we get 90% of the profit, but at the end of the day that 90% of the profits will be then divided in proportion to the capital that we contributed.

00:52:54--> 00:52:55

Now,

00:53:00--> 00:53:08

one other thing that that we have, which is the odor that you mentioned, the

00:53:10--> 00:53:29

when we talk about the profit, when we talk about the profit here and the essence of partnership, which is dedicated ionantha which will apply to others as well, when we talk about the profit is the profit then that we will the profit we can agree on whichever profit you know.

00:53:31--> 00:53:53

But this profit is a percentage of the actual profit, our individual profits will be a percentage percentage fraction of the actual profit, it cannot be a percentage of the capital and it cannot be a predetermined amount. lump sum

00:53:54--> 00:54:01

cannot be a percentage of the capital and it cannot be a predetermined amount. So we cannot say

00:54:02--> 00:54:15

you know we will get into this partnership, we will divide the profit 70% 30% you're contributing capital and labor, I'm contributing capital and labor, you know, we will divide the profit into 17 and 30.

00:54:18--> 00:54:20

And I will get

00:54:21--> 00:54:43

$100. On top of my before we divide before we divide the profit I give $100 and then we divide the profit between us. We can do that. That's a predetermined amount. We cannot say I will get 10% of my capital. Yet no.

00:54:44--> 00:54:49

You don't get percentage of your capital. You get percentage of the profit that we will make.

00:54:53--> 00:54:54

bonuses.

00:54:56--> 00:55:00

No but we are agreeing on the profit. We

00:55:00--> 00:55:06

You could take 80% of the profit, you could take 90% of the profit, you could take 95% of the profit,

00:55:11--> 00:55:31

no, no fixed amount, no fixed amount, and no no percentage of the capital, you cannot get a percentage of the capital and you cannot get any predetermined fixed amount, you have to get a percentage of the profit. Now, this creates another problem.

00:55:33--> 00:56:01

Why? Because let us say that one of us were required to really work a lot more. And we will even say that the same applies to the modaraba, the profit sharing, one is providing labor one is providing capital, let us say the labor says, You know, I go to the labor and tell him, you know, here is $100,000, I want you to invest it,

00:56:02--> 00:56:23

let's open a store. And you will be the manager of the store. And we will divide the profit between us, I get 50%, you get 50%, that labor will come and say but but I'm gonna have to dedicate my time to the store and I have to work eight to 10 or whatever.

00:56:25--> 00:56:26

And,

00:56:27--> 00:56:31

you know, I just, I need to make a living, I need to say I have a family.

00:56:33--> 00:56:57

And I'm not quite sure if that 50% and particularly in the first year for three years or first three years will be enough. I'm sorry, I'm not going to be able to do this. So how do we facilitate this, the ham bellies said that the labor, everybody agreed by consensus that you cannot combine between salary and profit. That's a consensus.

00:56:58--> 00:57:28

Yeah, you cannot combine between salary and profit in the contract of the partnership, the Contract with America by consensus. Now, figure out a way out of this, the hammer, he said that the labor can ask for enough other maintenance. And some of them said this is only if he will travel. Some of them like an American all added even if he makes a condition for an alpaca.

00:57:30--> 00:57:37

Without travel, he would be entitled to an Africa sustenance, maintenance

00:57:38--> 00:58:24

that is appropriate for someone like them. But still everybody was agreeing that you cannot combine between salary and profit. Why is it that he cannot combine between salary and profit because it is this ladder that I can read to ensure partnership and profit. If you combine between salary and profit, if one of the partners here said hi will be the manager and I will take $5,000 and then the profit will be divided between us. Maybe the profit of the company will not be even when $5,000 or maybe it will just be $5,000. And in this case, we got into this partnership. And you have asked for a salary in addition to the profit. And this resulted in

00:58:28--> 00:58:29

structure structure.

00:58:32--> 00:58:49

So this resulted in the profit be going to one party and not the others. And that is that is forbidden in partnerships. So how is it that contemporary scholars figured out because nowadays, it's not gonna work.

00:58:52--> 00:58:57

That contemporary scholars figured out a way out of this, they said we'll have two separate contracts.

00:58:58--> 00:59:08

So the contract and sometimes this may be may be like loophole making or something like this to us. But at the end of the day.

00:59:11--> 00:59:13

That's a different discussion. We'll get into this.

00:59:15--> 00:59:27

So we will make a contract. I will take all of your questions, because I'm just afraid because if you spin me off of my train of thought, I can go back.

00:59:29--> 00:59:29

So

00:59:34--> 00:59:36

So at the end of the day,

00:59:39--> 00:59:59

each contract will be self dependent to not be interdependent. The two contracts are not interdependent. So as partners we can choose Mohamed, for instance, to be the manager and since Mohammed will stay in the store for from eight to five

01:00:01--> 01:00:50

And we're not you know, and we are not saying the store we will contribute labor, but that not necessarily that much time consuming, then we will say to Mohammed you will get $2,000 has a manager of the store happens aside from the the the profit that you make, but that is a going to be an enter independent contract, meaning if we allow this contract, the partnership contract is not unknown. So, they are not interdependent, interdependent, they are completely separate. So, if we as partners come together and fire, one of our partners from his position as a manager, if this was part of the initial agreement of partnership, that whole cherry canal is dissolved.

01:00:51--> 01:01:01

But now, we will make two separate contracts. One is the partnership contract, and the other one is the hiring contract, you know, that

01:01:02--> 01:01:20

giving salary to an employee, now, this employee could be one of the partners or may not be one of the partners. And if we hire one of the partners as our employee, we could thereafter come and fire them, and the company would continue to

01:01:22--> 01:01:22

exist.

01:01:26--> 01:01:28

Okay, so

01:01:43--> 01:01:57

and then we need a little bit more, sort of it's the habit and a little bit more thought into some other forms of combining salary and percentage, let us say,

01:01:58--> 01:02:26

we agree that the labor will get 50% of the profit. But with a minimum salary of a fixed amount, well, you will get 50% of the profit. But if, if the profit is less than four, if the profit is less than $1,000, you will get $4,000. Every time and agreeing they're agreeing.

01:02:28--> 01:02:34

That is by agreement of the scholar is not permissible. However, the classical scholars

01:02:36--> 01:03:07

because that is basically combining salary and profit in one contract. And it is not like two contracts, same contract, we're saying here, you're going to be the you're going to do this work, you're going to get 50% off with have the admin have minimum amount of 4000, since you have family to take care of and stuff like this, and that is by agreement of classical scholars not allowed.

01:03:10--> 01:03:19

That's an area that needs exploration, you know, by contemporary scholars. It's an area that needs some exploration. Because here

01:03:21--> 01:03:33

Why are we saying that this is a problem? Because this could result in not in one of the partners coming out without profit, and the other one taking the money? And this is

01:03:35--> 01:03:36

this is basically

01:03:42--> 01:03:49

Yeah, I'm just trying to figure out how to say it, but extract profit not going to one person, not the other.

01:03:51--> 01:03:56

What is the problem here? The problem is here. It's called inequity.

01:03:58--> 01:04:03

It's called the inequity, the monitor segment guaranteeing the capital. What's the problem here? It's called deliberate.

01:04:06--> 01:04:08

ambiguity. What's the problem here, it's called the

01:04:12--> 01:04:21

lather repeat yardman no profit without liability. It is called the rep and it's called inequity. Could be this could be that.

01:04:25--> 01:04:46

But when it comes into this labor here, that we agree that he will take a minimum salary of some money, it may result in the profit all go into that labor. And this is not permissible because it's in equity. And that is not that's not the essence of partnership, that the profit will be divided.

01:04:47--> 01:04:50

But the last year the amount of data

01:04:52--> 01:05:00

data could have been bottom, Atlantic unity, Jonathan and Robin minko, who you believe do not develop

01:05:00--> 01:05:06

Your capital or your assets or your money among yourselves

01:05:07--> 01:05:14

Barton in false hood, unless it is a commerce unless it is a business

01:05:15--> 01:05:18

by mutual agreement unless it is a mutually agreed upon business

01:05:20--> 01:05:32

which says what the bottom that are the mutual agreement has a place and important place because this exception was made here from this ayah

01:05:34--> 01:05:39

under all sorts of Baccarat tokoto, American Football Club particular predicament

01:05:41--> 01:05:53

So, but the prohibition of inequity in transactions to be accepted in sort of Atlantic united American and Canadian income except if it is a business

01:05:54--> 01:05:58

upon which you agreed, you know, mutual agreement.

01:05:59--> 01:06:22

There is some room to think of alternatives here. Because here, this is not the capital exploiting labor. This is basically the capital securing for the labor, like some standard of living that NACA that the combat is talked about, and the even some of them said that even without travel, you'd be entitled to it.

01:06:23--> 01:06:31

So this is an area of exploration, this is not my pathways, like talking to you like sort of talking to myself here.

01:06:33--> 01:06:38

That's an area of exploration. So now the modaraba

01:06:41--> 01:06:43

to take some time off and come back.

01:06:44--> 01:06:52

Okay, we'll take some time off and come back. But before we go out there modaraba is agreed upon by all of them.

01:06:54--> 01:07:03

So we have two different tech companies that are agreed upon by all of them. That is modaraba and Elena

01:07:06--> 01:07:07

will take seven minutes and come back