(Series of Answers by the Scholar Ata Bin Khalil Abu Al-Rashtah, Ameer of Hizb ut-Tahrir, to Questions from Visitors to His Facebook Page)
To Hanin Islem
Questions:
Assalamu Alaikum Wa Rahmatullahi Wa Barakatuh,
How are you, our virtuous Sheikh and noble scholar? I hope to Allah that you are in the best of conditions.
My first question: Can a partner exit a partnership whenever he wants, knowing that there is a pre-agreed duration of one year? Please provide some detail and evidence, may Allah bless you.
My second question: Public auctions are held for sales where excessive bidding occurs between traders, and the final price reaches many times the original price, leading to the loss of some traders. Is it Shari'ah-permissible for a trader to outbid to a degree that leads to the loss and sometimes the bankruptcy of his competitor? Please provide evidence and detail, may Allah bless you.
My third question: To avoid excessive bidding, an agreement is made between traders in a public or private auction before it takes place: some of them give money to others so that they do not outbid each other or so the price does not reach the maximum limit. What is the ruling on the money given between these traders? And what is the ruling on this commercial process? Please provide some detail and evidence, and may Allah reward you with all goodness on our behalf.
Pardon me for the length and the many questions; I know the weight of your responsibilities. May Allah aid you, grant victory through your hands, and prepare for you people of support (Nusrah) just as He prepared them for His beloved Al-Mustafa (saw), and may He keep you as a treasure for Islam.
Answer:
Wa Alaikum Assalam Wa Rahmatullahi Wa Barakatuh,
First: Your question regarding the duration in a partnership:
1- Linguistically, Sharikah (partnership) means the mixing of two shares or more such that one is indistinguishable from the other. Technically (Shari'ah definition), it is a contract between two or more people who agree to perform a financial task with the aim of making a profit. Like all contracts, the partnership contract requires the presence of both offer and acceptance. The offer is for one to say to the other, "I enter into a partnership with you in such-and-law," and the other says, "I accept." However, the contract must include the meaning of partnership over something.
Partnership is permissible because the Prophet (saw) was sent while people were dealing with it, and he (saw) approved of it. His approval of people's dealings is a Shari'ah evidence for its permissibility. Abu Dawood narrated from Abu Hurairah that the Prophet (saw) said:
إِنَّ اللَّهَ يَقُولُ: أَنَا ثَالِثُ الشَّرِيكَيْنِ مَا لَمْ يَخُنْ أَحَدُهُمَا صَاحِبَهُ، فَإِذَا خَانَهُ خَرَجْتُ مِنْ بَيْنِهِمَا
"Allah says: 'I am the third of two partners as long as one of them does not betray his companion. If he betrays him, I depart from them.'"
2- Mentioning a duration in a partnership contract is not mandatory. A partnership does not need a duration for its validity, and there is no ambiguity (jahala) in its contract that requires specifying a term, unlike Ijarah (leasing/hiring), for example. Ijarah is considered ambiguous if the duration is not mentioned and thus does not contract unless a term is specified—whether that duration is independent (daily, monthly, yearly) or connected to the task itself (like hiring someone to build a wall or dig a well, where the duration is tied to the completion of the work).
3- The dissolution of a partnership depends on the desire of each partner. The two partners contract it for a specific work and dissolve it whenever they wish.
The following is stated in The Economic System regarding the dissolution of a partnership:
"Partnership is one of the permissible (ja'iz) contracts in Shari'ah. It is annulled by the death of one of the partners, his insanity, or his legal restriction due to incompetence, or by dissolution by one of them if the partnership consists of two people, because it is a permissible contract, so it is annulled by that just like a proxy (wakalah). If one of the partners dies and has a mature heir, the heir has the right to continue the partnership, and the partner may permit him to dispose of assets, or he may demand division. If one of the partners requests dissolution, the other partner must grant his request. If there are multiple partners and one requests to dissolve the partnership while the rest agree to continue, the existing partnership is dissolved and then renewed among the remaining partners. However, a distinction is made in dissolution between Mudaraba and other types. In Mudaraba, if the worker requests to sell the assets and the capital owner requests division, the worker's request is granted because his right is in the profit, and profit only appears through selling. In other types of partnership, if one requests division and the other requests sale, the request for division is granted, not the request for sale." End quote.
This is what we adopt in the event that a partnership is formed without a duration, as a duration is not necessary for the validity of the partnership contract.
4- However, if a duration is mentioned in the partnership, the jurists (fuqaha) have differed on this. You may follow any mujtahid whose ijtihad you trust. I convey to you the views of some reputable mujtahids on this matter:
It is permissible to set a time limit for Mudaraba according to the Hanafis and Hanbalis; i.e., a time "duration" is specified for it, and when the time ends, the partnership ends.
The Malikis and Shafi'is held that Mudaraba does not accept time limits because its ruling, as the Malikis stated, is that it should be without a term, so each of them can leave it whenever they want. Moreover, setting a time limit—as the Shafi'is stated—leads to restricting the worker in his work. Al-Nawawi mentioned in Al-Rawdah that in Qirad (Mudaraba), specifying the duration is not considered...
Second: Your question regarding auction sales:
1- Auction sales are permissible; meaning the seller offers his commodity to buyers and sells it to whoever pays more. The evidence for this is:
Ibn Majah narrated from Anas bin Malik: أَنَّ رَجُلاً مِنْ الأَنْصَارِ جَاءَ إِلَى النَّبِيِّ صلى الله عليه وسلم يَسْأَلُهُ فَقَالَ: لَكَ فِي بَيْتِكَ شَيْءٌ؟ قَالَ: بَلَى، حِلْسٌ نَلْبَسُ بَعْضَهُ وَنَبْسُطُ بَعْضَهُ وَقَدَحٌ نَشْرَبُ فِيهِ الْمَاءَ، قَالَ: ائْتِنِي بِهِمَا، قَالَ: فَأَتَاهُ بِهِمَا، فَأَخَذَهُمَا رَسُولُ اللَّهِ صلى الله عليه وسلم بِيَدِهِ ثُمَّ قَالَ: مَنْ يَشْتَرِي هَذَيْنِ؟ فَقَالَ رَجُلٌ: أَنَا آخُذُهُمَا بِدِرْهَمٍ، قَالَ: مَنْ يَزِيدُ عَلَى دِرْهَمٍ مَرَّتَيْنِ أَوْ ثَلاثًا، قَالَ رَجُلٌ: أَنَا آخُذُهُمَا بِدِرْهَمَيْنِ، فَأَعْطَاهُمَا إِيَّاهُ وَأَخَذَ الدِّرْهَمَيْنِ فَأَعْطَاهُمَا الأَنْصَارِيَّ...
"That a man from the Ansar came to the Prophet (saw) asking for help. He (saw) said: 'Do you have anything in your house?' He said: 'Yes, a hils (thick cloth/mat) part of which we wear and part of which we spread, and a qadah (drinking bowl) from which we drink water.' He (saw) said: 'Bring them to me.' He brought them, and the Messenger of Allah (saw) took them in his hand and said: 'Who will buy these two?' A man said: 'I will take them for one dirham.' He (saw) said: 'Who will bid more than a dirham?' (two or three times). A man said: 'I will take them for two dirhams.' So he gave them to him, took the two dirhams, and gave them to the Ansari..."
2- However, Najsh is not permitted in this sale: which is to increase the price not to buy, but to deceive others into buying it at a high price. Al-Bukhari narrated from Sa'id bin al-Musayyib that he heard Abu Hurairah (ra) say: The Messenger of Allah (saw) said:
...ولا تناجشوا...
"...and do not practice Najsh..."
He also narrated from Ibn Umar (ra):
نَهَى النَّبِيُّ صلى الله عليه وسلم عَنِ النَّجْشِ
"The Prophet (saw) forbade Najsh."
Najsh is for someone to outbid on a commodity without intending to buy it, so that someone else who is bidding follows his lead, thinking that he would not have bid that much unless it was worth it. Thus, he is deceived and bids more to buy it.
3- Similarly, it is not permissible for buyers to agree among themselves to undercut the price of the commodity and agree not to pay more than a low price... and not to exceed it, in order to force the seller to sell at this cheap price because he finds no trader paying more. Usually, traders agree with one trader to whom he gives money in exchange for them not outbidding the price he pays. He pays a cheap price for the commodity while they pay less than him according to the agreement, and then the owner sells it to that trader at the cheap price because all traders are paying less according to the agreement. This falls under the category of deception. Ibn Hibban narrated in his Sahih from Zirr from Abdullah: The Messenger of Allah (saw) said:
مَنْ غَشَّنَا فَلَيْسَ مِنَّا، وَالْمَكْرُ وَالْخِدَاعُ فِي النَّارِ
"Whoever cheats us is not of us, and plotting and deception are in the Fire."
Ishaq bin Rahwayh narrated in his Musnad from Abu Hurairah that the Prophet (saw) said:
الْمَكْرُ وَالْخَدِيعَةُ فِي النَّارِ
"Plotting and deception are in the Fire." (Also narrated by al-Bazzar).
Likewise, Allah (swt) forbids depriving people of their things (bakhs). The buyers pretend that the value of the commodity is meager to deceive its owner into selling it at a paltry price. He (swt) said:
وَلا تَبْخَسُوا النَّاسَ أَشْيَاءَهُمْ
"And do not deprive people of their due." (Surah Ash-Shu'ara [26]: 183)
Al-Qurtubi says in his tafsir of the verse: ["And do not deprive people of their due"—Al-Bakhs is reduction. It occurs in the commodity by citing defects or devaluing it, or by deceiving regarding the value, or by trickery in increasing the measure or decreasing it. All of that is part of consuming wealth unjustly...] End quote.
Therefore, if traders agree among themselves that a certain person should buy the commodity at a cheap price, and he gives them money so they do not raise the price above what he wants to pay—in other words, the traders agree to bid less than the price that man wants to buy at in exchange for him paying them money—this process is haram. This is because it falls under the category of deceiving the owner of the commodity into selling it at a cheap price, and the money that this trader takes from the other traders is haram.
Your brother, Ata Bin Khalil Abu Al-Rashtah
Link to the answer from the Ameer's Facebook page