Silent Partnership | Islamic Laws by The Leader Ayatullah Ali Khamenei
Q1880. Is silent partnership in other than gold and silver currencies permissible?
A: There is no objection to a silent partnership being conducted in banknotes that are used nowadays. It is not permissible, though, to be conducted in merchandise.
Q1881. Is it all right to make use of a silent partnership contract in domains such as production, services, distribution, and trade? And are the contracts of present-day silent partnerships outside the commercial arena concluded under this definition, legal?
A: A silent partnership contract should be confined to investing the capital in trade, i.e. buying and selling only. Using it under this title in the domains of production, distribution, services, and others is not permissible.
However, there is no objection to resorting to other shari contracts such as jualah and ṣulH.
Q1882. I took a sum of money from a friend of mine by way of a silent partnership. It was agreed that I would return the money with an extra amount added to it after a period of time. I gave part of this money to another friend who was in need of it. It was agreed with the latter that he would settle one-third of the mark up. Is this type of dealing legitimate?
A: Taking money from someone on condition that it would be paid back after a while with an extra amount added to it does not fall under the silent partnership type of contract. It is a riba-bearing loan that is Haram. Taking the money as silent partnership does not amount to borrowing. The money will not become the property of the working partner. In other words it remains the property of the original owner. However, the working partner can still trade in it. They [the owner and the working partner] share the profits made in accordance with the partnership they agreed. The recipient of the money has no right to lend any of it to a third party, nor has he the right to give it to the others under a silent partnership deal unless it is done with the consent of the owner.
Q1883. What is the view on borrowing money under the title of "silent partnership" from people who charge between 4% and 5% monthly as a "profit" according to the contract?
A: Borrowing money in this way has nothing to do with silent partnership. Indeed, it is borrowing with riba that is Haram. It will not become Halal by deceptively giving it another name, although the loan contract is correct and the borrower becomes the owner of the money he borrowed.
Q1884. A person gave another a sum of money to trade in it on the condition that he pays the lender a monthly sum as profit and bear the loss. Is this kind of deal legitimate?
A: There is no harm in the agreement between the two parties if it is based on a proper and shari silent partnership. Nor there is any harm in making a provision in the process that the working partner gives the owner a monthly portion of his proportional share of profit on account and bears the loss.
Q1885. I gave a person a sum of money to import a number of vehicles on condition that we equally share the profits arising from the sale. After a while, he gave me a sum of money, saying that it was my share of the profit. Is it permissible for me to take that money?
A: If you gave him the money by way of a silent partnership, he then bought the vehicles and sold them, and paid you your share of the profit, the money is yours by shar.
Q1886. A person deposited a sum of money with another person to trade in it on the condition that he would receive a sum of money on account. At the end of the year they agreed to prepare the profit and loss account of the business. If the owner of the money and his partner agreed to settle the profit and loss, is this acceptable?
A: There is no harm in the payment of money to the person if it was based on a proper and shari silent partnership deal, and the owner of the money took from the working partner monthly a portion of the profits on account so that the exact amount would be calculated later. Nor is there any harm in the partners settling their dues at the end of each year. Yet, should it take the form of a loan on the condition that the borrower would pay a monthly share of the profit to the lender, then they would make a settlement at the end of the year of what each of them owes the other, this indeed is a riba-bearing loan that is Haram. Accordingly, the provision contained therein is void, although the loan contract is correct. Moreover, it shall not become Halal for them because they agreed to settle their respective dues. Therefore, the lender has no right to receive any profit, neither is he obliged to bear any loss.
Q1887. A person took a sum of money from another by way of a silent partnership. It was agreed that the working partner takes two thirds of the profit and one third goes to the owner of the money. The working partner bought goods and sent them to his hometown. On the way, the goods were stolen. Who should bear the loss?
A: The loss of capital or trading money wholly or in part shall be borne by the owner provided that the working partner, or any other party, is not to blame for acting unjustly. However, it is defrayed by the profit unless it was agreed that the working partner bears the loss.