Silent Partnership: Permissibility of Profit-Sharing Money Exchanges Without Ribā

Practical Laws of Islam as per the teachings of Imam Khamenei

Silent Partnership: Permissibility of Profit-Sharing Money Exchanges Without Ribā

English:

Question #1888:

Is it permissible to give or take money with the intention of trading and making profit that is to be shared between the two parties as they see fit, without this being described as ribā?

Answer #1888:

If giving or taking the money was done with the intention of trading by way of a loan, all the profit should go to the borrower. Any damage or loss should be borne by him too. The lender has a right to nothing apart from the compensation for the actual money he lent, i.e. he should not demand any share of the profit. Yet, if the money was given or taken by way of silent partnership, getting any returns thereof should be dependent on the materialisation of a proper and legal contract between the two parties, in accordance with all required conditions. Among them is the agreement that each receives a certain percent of the profit. Otherwise, both the money [capital] and the profits made from trading with it should go to the owner. The worker should receive compensation for his labor.

-Imam Khamenei, Practical Laws of Islam, Importance and Conditions of Silent Partnership