Small Tuck Shop Partnership

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

There are two possible methods to run the business in reference.

1. Mudharabah

Mudharabah is a partnership wherein one partner (Rabbul Maal) contributes the capital whilst the other partner (Mudharib) will offer his time and effort to manage the business. The Rabbul Maal and the Mudharib may mutually agree to share a percentage of the profit, for example, 70% and 30%. However, the following must be kept in mind:

All expenses of the business will be paid from the profit and the balance of the profit will then be distributed as per agreement.

All losses will be borne by the Rabbul Maal. The Mudharib will lose his efforts and time.

If losses are incurred due to negligence from the Mudharib, then he can be held liable.[1]

Neither partner can stipulate a fixed sum as his profit. It must be a percentage of actual profits realised.

Neither partner can claim a salary from the business.

2. Ijaarah

Ijarah is to employ the services of a person on wages given to him as consideration for his hired services. The employer is called Musta’jir while the employee is called Ajir.[2] This is a normal employment contract.

Person A will purchase and stock the tuck shop. He shall then employ person B to run his shop for him. Person B will be entitled to a salary (monthly, weekly, etc.) which should be mutually agreed upon. In this method:

Person B will not be entitled to anything above his stipulated salary

All profits (after deducting expenses) from the business will belong to person A.

The employment period e.g., a 1-year contract, must be stipulated. The working hours must also be stipulated.

The salary of person B is not dependent on the business turning a profit.

And Allah Ta’āla Knows Best

Hasan Ahmed Razzak

Student – Darul Iftaa

Paterson, New Jersey, USA

Checked and Approved by,

Mufti Ebrahim Desai

(2021-02-04)