Ruling 2228

A sleeping partnership is a contract between two people: one of them, the ‘owner’ (mālik), provides capital to the other, the ‘worker’ (ʿāmil). The worker trades with  the capital and the profits are divided between him and the owner. The validity of such a transaction (muʿāmalah) is conditional upon the following matters:

1. offer and acceptance. In expressing these, any word or action that conveys their meaning is sufficient;
2. the parties must have reached the age of legal responsibility (bulūgh), be sane (ʿāqil), and have the ability to take care and use their wealth in a correct way (rushd). They must also enter into the agreement of their own volition (ikhtiyār). With regard to the owner specifically, it is a condition that he must not be prohibited from having disposal over his property (al‑maḥjūr ʿalayh) by a fully qualified jurist (al‑ḥākim al‑sharʿī) due to bankruptcy. This condition does not apply to the worker except in the case where the agreement requires him to have disposal over property that belongs to him but which he is prohibited from having disposal over;
3. the share of the owner and the worker from the profit must be specified in terms of a fraction, such as a third, a half, or any other fraction. But this condition does not apply when the share of each is customarily determined in the market, such that it is commonly understood that there is no need to state this condition. Furthermore, determining each share by stating an amount of the capital, such as £10,000, is not sufficient. However, once the profits become evident, one of them can reach a settlement (ṣulḥ) with the other with respect to his share for an amount of the capital;
4. the profits must only be shared between the owner and the worker. Therefore, if a condition is stipulated that some of the profits are to be given to another person, the sleeping partnership is invalid (bāṭil) except if it is in exchange for some work relating to the sleeping partnership;
5. the worker himself must be able to trade, in the event that a restriction is mentioned in the contract that he must conduct the trade himself. For example, if it is said, ‘I give you this money so that you personally trade with it yourself’ and the worker is unable to do so, the contract is void (bāṭil). But if conducting the trade himself is mentioned as a condition [as opposed to a restriction] in the contract – for example, it is said, ‘I give you this money so that you trade with it on condition that you do it yourself’ – and the worker is unable to do so, the transaction is not void. However, the owner has the option (khiyār) to annul (faskh) the contract in case the worker does not conduct the trade himself. Furthermore, if the contract mentions neither a restriction nor a condition but the worker is unable to trade even by appointing someone else, the contract is void. If he is able to trade at the beginning but not later on, the contract is void from the time he cannot trade.