Forming a partnership with a farmer

Q: If I venture into a capital investment partnership in which I will give the capital and my partner does the work. It will be specific to animals, my funds but animals will be at his farm, eat of his land and drink his water... But yes, any extra major expenses above this will be born from the capital amount which I give. Will this type of partnership be permissible if profits are split percentage wise?

A: There are two types of partnership. The first is a shirkat partnership and the second is a mudhaarabah partnership.

In a shirkat partnership, it is necessary for both partners to invest capital and the running of the partnership is the responsibility of both partners.

In a mudhaarabah partnership, one partner invests the entire capital and the other partner has the complete responsibility of running the business. The partner who invests capital does not have any responsibility in the running of the business.

Hence, in the situation explained in the question, this type of partnership does not conform to the requirements of a shirkat partnership nor a mudhaarabah partnership. Hence, it is not permissible for both of them to enter into this type of partnership.

The partnership does not conform to the conditions of a shirkat partnership as one partner is not investing any monetary capital. The animals feeding from what grows on his land is not regarded as a valid capital contribution in shariah. Similarly, the partnership does not conform to the conditions of a mudhaarabah partnership as the partner who has to take care of the animals is required to allow the animals to graze from his land (as his contribution to the partnership), and this condition is an invalid condition.

The solution in this situation is that the partner who owns the land but does not have capital should lease part of his land to his partner who has the capital for a specific period (e.g. for five years) in exchange of half the capital (which will be paid upfront). Thereafter, both partners may invest their capital in the partnership. In this way, the partnership will be a shirkat partnership and both can share the profits that accrue from the partnership.

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

(فأما شركة المفاوضة فهي أن يشترك الرجلان فيتساويان في مالهما وتصرفهما ودينهما) ... (وأما شركة العنان فتنعقد على الوكالة دون الكفالة وهي أن يشترك اثنان في نوع بر أو طعام أو يشتركان في عموم التجارات ولا يذكران الكفالة) وانعقاده على الوكالة لتحقق مقصوده كما بيناه، ولا تنعقد على الكفالة لأن اللفظ مشتق من الأعراض يقال عن له أي عرض وهذا لا ينبئ عن الكفالة وحكم التصرف لا يثبت بخلاف مقتضى اللفظ (ويصح التفاضل في المال) للحاجة إليه وليس من قضية اللفظ المساواة (ويصح أن يتساويا في المال ويتفاضلا في الربح) (الهداية 3/5-9)

(المضاربة عقد على الشركة بمال من أحد الجانبين) ومراده الشركة في الربح وهو يستحق بالمال من أحد الجانبين (والعمل من الجانب الآخر) ولا مضاربة بدونها (الهداية 3/200)

كتاب المضاربة

(هي) لغة مفاعلة من الضرب في الأرض وهو السير فيها وشرعا (عقد شركة في الربح بمال من جانب) رب المال (وعمل من جانب) المضارب (الدر المختار 5/645)

Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)