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Rules of Partnership.

2245. If two persons make an agreement that they would trade with the goods jointly owned by them, and would divide the profit between themselves, and if they pronounce a formula declaring partnership, in Arabic or in any other language, or express their intention of becoming each other’s partner by conduct, the partnership will be valid.

2246. If some persons enter into a partnership to share the wages from their labor, like, if a few tailors or laborers agree mutually that they would divide between themselves whatever wages they earn, that partnership is not in order. But if they enter into a mutual compromise to divide all that they get as wages, it is in order.

2247. If two persons enter into a partnership, on the terms that each of them would purchase the commodity on his own responsibility, and each would be responsible for the payment of its price, but would share the profit which they earn from that commodity, that partnership is not valid. However, if each of them makes the other his agent, authorizing that whatever one purchases the other will be a partner in it, then they will be considered partners in that commodity.

2248. The persons who become partners under the rules of partnership, must be adult and sane, and should have intention and free volition for becoming partners. They should also be able to exercise discretion over their properties. Impudently, enters into partnership, it is not in order, because such a person has no right of disposal over his property. The same applies to a bankrupt person, after issuing of such verdict by a fully competent Mujtahid.

2249. If a condition is laid down in an agreement of partnership, that the partner, who works or does more work than the other partner, takes more benefit, or the person who does not work or does less work (as a compassionate action or other reasons) takes more benefit, then these conditions should be observed.

2250. If it is agreed (as a compassionate action or other reasons) that the entire profit is given to a partner or all loss or a great part of loss is borne by one partner, that partnership and agreement are both correct.

2251. If it is not agreed that one of the partners will receive more profit, and if the investment of each of them is equal, they must share profit and loss equally. And if their investment is not equal, they should divide the profit and loss in proportion to their capital, For example, if two persons become partners, and the capital of one of them is double the capital of the other, his share in the profit and loss will also be double of the other, irrespective of whether both of them do equal work, or one of them does less work, or does not work at all.

2252. If it is laid down in the agreement of partnership, that both the partners will buy and sell together, or each of them will conclude transactions individually, or only one of them will conclude transactions, they should act as agreed upon.

2253. If it is not specified as to which of the partners will buy and sell with the capital, neither of them can conclude any transactions with that capital without the permission of the other. But if they permit in one transaction to do so, so that there is no need for new permissions later, the first permission is sufficient.

2254. The partner, who has been given the right discretion over the capital, should act according to the agreement of partnership. For example, if it is agreed that he will purchase on credit, or will sell against cash payment, or will purchase the property from a particular place, he should act according to the agreement. However, if no such agreement is made with him, he should conclude transactions in the usual manner, and carry on in such a way that no loss is suffered in the partnership. He should not carry any property belonging to the partnership, with him while he is travelling, if that is unusual, or sell against cash.

2255. If a partner who transacts business with the capital of the partnership, sells and purchases things contrary to the agreement made with him, or concludes transactions in a manner which is not normal, because of the absence of any agreement, the transaction made by him in both the cases will be correct and valid; but is such a transaction results in a loss, or a part of wealth is squandered, then the partner who has against the agreement, or the usual norm, will be responsible for the loss. But if he acts according to agreed terms, it is correct but if it is stated in the agreement of partnership that such failure will render other activities of the concerned party void, then the other subsequent transactions are not in order.

2256. If a partner, who trades with the capital of the partnership, does not go beyond the bounds of his authority, nor is he negligent in looking after the capital, yet unexpectedly the entire capital or a part of it perishes, he is not responsible.

2257. If a partner, who trades with the capital of the partnership, declares that the capital has perished and swears before a fully competent Mujtahid, his word must be accepted.

2258. If all the partners withdraw the permission given by them to one another, for the right of discretion over their respective shares held in partnership, none of them will be allowed the right of discretion over them.
And if one of them withdraws the permission accorded by him, the other partners do not have the right of discretion; but one who has withdrawn his permission can exercise his right of discretion over the property of the partnership.

2259. If one of the partners requests to divide the capital of the partnership, the other should accept it, even if the partnership has a duration.

2260. If one of the partners dies, or becomes insane, or unconscious, other partners cannot continue to exercise right of discretion over investment held in the partnership. And the same rule applies when one of them becomes feeble-minded that is, spends his property without any consideration, or a fully competent Mujtahid rules out his right of discretion in his property.

2261. If a partner purchases a thing on credit for himself, its profit and loss belongs to him. However, if he purchases it for partnership, and if the other one allows the dealings, its profit and loss belongs to both of them.

2262. If the partners conclude a transaction with a joint capital investment, and it transpires later that the partnership was invalid, if the validity of the transaction was not dependent on mutual validity of partnership the transaction will be considered valid, andwhatever is gained or lost from the transaction will be shared by them. But if it was so dependent, the transaction is out of limit and if they all agree it will be valid and otherwise it is void. In such transaction, no wage is considered for any work of partners.