Dispute over the nature of a transaction where capital generated profit: partnership (Qirad) vs. agent retaining all profit.

General Chapter

Al-Mughni

Book of Partnership

Book 18 · Issue 4 · Bab 1

Open in Qurani

Primary text

If an agent is given one thousand to trade and makes a profit, and the agent claims the profit belongs entirely to him as a loan arrangement, while the owner claims it was a profit-sharing partnership (Qirad), the statement of the owner is accepted because he owned the capital, and thus his statement regarding how it left his possession regarding its nature is authoritative. Upon the owner's oath, the profit is divided between them.

Supporting text

There is an alternative view that both parties should swear oaths, and the agent receives the greater of either the stipulated profit share or the customary wage for his labor (Ujrat al-Mithl). If the owner claims the transaction was a 'Bida'ah' (consignment/simple bailment) and the agent claims it was 'Qirad,' the statement of the agent might be accepted regarding his labor. If both sides bring evidence for their claims, the narration from Ahmad via Muhanna states the evidence nullifies itself, and the profit is split equally.