The World Federation One Stop Fiqh

Ruling 2160

A partnership can be of two types: [i] a permission-based partnership (al‑shirkah al‑idhniyyah); in this type, before the partnership conducts a transaction (muʿāmalah), the trade property is owned by the partners (shurakāʾ) in the form of joint ownership (mushāʿ). And [ii] exchange-based partnership (al‑shirkah al‑muʿāwaḍiyyah); in this type, each partner presents his own property to the partnership, and as a result, each of them exchanges half of their own property with half of the other’s property. Therefore, if they do not specify which one of them will buy and sell with the capital, then, if it is a permission-based partnership, none of them can conduct a transaction with the capital without the consent of the others. However, if it is an exchange-based partnership, then each partner can conduct a transaction in a way that does not harm the partnership.