Rules & Conditions of Shirkat-ul-Aqd
Common conditions are three which are as follows:
- a) The existence of Muta’aqideen (Partners):
- b) Capability of Partners: Must be sane & mature and be able of entering into a contract. The contract must take place with free consent of the parties without any fraud or misrepresentation. c) The presence of the commodity: This means the price and commodity itself.
Special conditions are also three which are as follows:
- a) The commodity should be capable of an Agency: The object in the contract must qualify as a commodity having value and not as a free good which is accessible to all. For example grass or wood cannot be made the subject matter. As each partner is responsible for managing the project, therefore he will directly influence the overall profitability of the business. As a result, each member in Shirkat-ul-Aqd should duly qualify as legally being eligible of becoming an agent and of carrying on business eg. ‘A’ has written a book and owns it, ‘B’ cannot sell it unless ‘A’ appoints ‘B’ as his agent.
- b) The rate of profit sharing should be determined: The share of each partner in the profit earned should be identified at the time of the contract. If however, the ratio is not determined before hand the contract becomes void (Fasid). Therefore identifying the profit share is necessary.
c) Profit & Loss Sharing: All partners will share in profit as well as loss. By placing the burden of loss solely on one or a few partners makes the partnership invalid. A condition for Shirkat-ul-Aqd is that the partners will jointly share the profit. However, defining an absolute value is not permissible, therefore only a percentage of the total return is allowed.
Source: Dr. Muhammad Imran Ashraf Usmani, Meezan Bank’s Guide to Islamic Banking.
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