Is a partnership (*sharika*) valid when transacted using paper money (*fulus*)?
General Chapter
Al-Mughni
Book of Partnership
Primary text
A partnership transaction using paper money is invalid. This opinion is held by Abu Hanifa, Al-Shafi'i, and Ibn al-Qasim from the school of Malik. The basis for invalidity rests on the fact that the value of paper money fluctuates; it may be circulating (*nafiqa*) at one time and out of circulation (*kasida*) at another, causing it to resemble trade commodities (*urud*). If it is deemed valid, when the currency is circulating, the capital contribution (*ra's al-mal*) is considered to be the nominal value of the currency itself. If the currency is out of circulation, its value is treated like that of general trade commodities.
Supporting text
It is possible to rule that the partnership is valid in all cases, whether the currency is circulating or not, based on the permissibility of partnership using trade commodities. Ahmad stated that he does not see validity in *Salaf* (forward sale) using paper money because it resembles currency exchange (*sarf*). This latter view is also attributed to Muhammad ibn al-Hasan and Abu Thawr, who argue that since paper money functions as a medium of exchange (price), its use in partnership should be valid, similar to silver dirhams and gold dinars.