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Dear Muslim brothers and sisters.

I'd like to know which of the following forms of income are Halal and Haram.

Situation #1: Person “A” knows how to do a business but he doesn't have money. Person “B” has money but doesn't know how to do the business. Person “A” asking the person “B” to invest money and in return offering to share the profit. So, the person “A” will run the business, and the profit from the business will be divided equally. Invested money will not be returned.

Question #1 Is person “A”’s income Halal in Situation #1? (What if invested money will be returned?)

Question #2 Is person “B”’s income Halal in Situation #1? (What if invested money will be returned?)

Situation #2: Person “X” wants to do a business but he doesn't have money, that is, needs seed financing. Person “Y” has money and person “X” decided to ask him for a help. The person “Y” is agreeing to help under condition if he will get share from the profit.

Question #3 How should person “X” act in Situation #2?

(Brief answers will suffice)

  • What do you mean by the addition (What if invested money will be returned?) – Sassir Jan 6 at 11:21
  • The last statement of Situation #1 is "Invested money will not be returned". That is the opposite of it - "What if invested money will be returned". – Bahrom Jan 6 at 11:24
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All these kinds of businesses are halal as long as both parties agree to (and act upon) the conditions made in the business contract (basically the shares of the win). 50:50 shares are actually not unusual if only two parties are involved.

The Messenger of Allah (ﷺ) having said: Allah, Most High, says: "I make a third with two partners as long as one of them does not cheat the other, but when he cheats him, I depart from them." (Sunan abi Dawod)

In Islam this business where a person gives another person money and leave it do business with is called sharikat al-Mudarabah شركة المضاربة .

Note a business needs always money so even if the starting money will be gained as a win the contract must went forth or one of both parties must buy himself free from this contract and seek something like an annulment of the original contract and this will rarely be beneficial: In that case he will need to start the business from zero and Allah knows best.

However I found fatwas saying that the party who gave the money can ask his seed money back at any time.

In this fatwa you may read some more in Arabic or Urdu.

  • @Bahrom why should it contradict? This is business not charity. – Sassir Jan 6 at 11:45
  • Sadly the fatwa is only available in these two languages and I'm not fluent enough to translate I couldn't find any fatwa in English so far on this kind of business. – Sassir Jan 6 at 11:53

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