32. Qirad

Malik related to me from Zayd ibn Aslam that his father said,"Abdullah and Ubaydullah, the sons of Umar ibn al-Khattab went outwith the army to Iraq. On the way home, they passed by Abu Musa al-Ashari who was the amir of Basra. He greeted them and made themwelcome, and told them that if there was anything he could do to helpthem, he would do it. Then he said, 'There is some of the property ofAllah which I want to send to the amir al-muminin, so I will lend itto you, and you can buy wares from Iraq and sell them in Madina. Thengive the principal to the amir al-muminin, and you keep the profit.'They said that they would like to do it, and so he gave them the moneyand wrote to Umar ibn al-Khattab to take the money from them. Whenthey came to sell they made a profit, and when they paid the principalto Umar he asked, 'Did he lend everyone in the army the like of whathe lent you?' They said, 'No.' Umar ibn al-Khattab said, 'He made youthe loan, because you are the sons of the amir al-muminin, so pay theprincipal and the profit.' Abdullah was silent. Ubaydullah said, 'Youdo not need to do this, amir al-muminin. Had the principal decreasedor been destroyed, we would have guaranteed it.' Umar said, 'Pay it.'Abdullah was silent, and Ubaydullah repeated it. A man who was sittingwith Umar said, 'Amir al-muminin, better that you make it a qirad.'Umar said, 'I have made it qirad.' Umar then took the principal andhalf of the profit, and Abdullah and Ubaydullah, the sons of Umar ibnal-Khattab took half of the profit." Malik related to me from al-Ala ibn Abd ar-Rahman from his fatherfrom his father that Uthman ibn Affan gave him some money as qirad touse provided the profit was shared between them. Malik said, "The recognised and permitted form of qirad is that aman take capital from an associate to use. He does not guarantee itand in travelling pays out of the capital for food and clothes andwhat he makes good use of, according to the amount of capital. Thatis, when he travels to do the work and the capital can support it. Ifhe remains with his people, he does not have expenses or clothing fromthe capital." Malik said, "There is no harm in the twoparties in a qirad helping each other by way of a favour when it isacceptable to them both." Malik said, "There is no harm inthe investor of the capital buying some of the goods from the agent inthe qirad if that is acceptable and without conditions." Malik spoke about an investor making a qirad loan to a man and hisslave, to be used by both. He said, "That is permitted, and there isno harm in it because the profit is property for his slave, and theprofit is not for the master until he takes it from him. It is likethe rest of his earnings." Malik said, "When a man owes money to another man and he asks himto let it stay with him as a quirad, that is disapproved of until thecreditor receives his property. Then he can make it a qirad loan orkeep it. That is because the debtor may be in a tight situation, andwant to delay it to increase it for him." Malik spoke aboutan investor who made a qirad loan to a man, and some of the principalwas lost before he used it, and then he used it and made a profit. Theagent wanted to make the principal the remainder of the money afterwhat was lost from it. Malik said, "His statement is not accepted, andthe principal is made up to its original amount from his profit. Thenthey divide what remains after the principal has been repaid accordingto the conditions of the qirad." Malik said, "Qirad loan isonly good in gold or silver coin and it is never permitted in any kindof wares or goods or articles." Malik said, "There arecertain transactions which if a long span of time passes after thetransaction takes place, its revocation becomes unacceptable. As forusury, there is never anything except its rejection whether it is alittle or a lot. What is permitted in other than it is not permittedin it because Allah, the Blessed and the Exalted, said in His Book,'If you repent, you have your capital back, not wronging and notwronged. ' " 32.4 Conditions Permitted in Qirad Yahya said that Malik spoke about an investor who made a qiradloan and stipulated to the agent that only certain goods should bebought with his money or he forbade certain goods which he named to bebought. He said, "There is no harm in an investor making a conditionon an agent in qirad not to buy a certain kind of animal or goodswhich he specifies. It is disapproved of for an investor to make as acondition on an agent in qirad that he only buy certain goods unlessthe goods which he orders him to buy are in plentiful supply and donot fail either in winter or summer. There is no harm in that case." Malik spoke about an investor who loaned qirad money andstipulated that something of the profit should be his alone withoutthe agent sharing in it. He said, "That is not good, even if it isonly one dirham unless he stipulates that half the profit is his andhalf the profit is the agent's or a third or a fourth or whatever.When he names a percentage, whether great or small, everythingspecified by that is halal. This is the qirad of the muslims." He said, "It is also not good if the investor stipulates that onedirham or more of the profit is purely his, with out the agent sharingit and then what remains of the profit is to be divided in halfbetween them. That is not the qirad of the Muslims." Yahya said that Malik said, "The person who puts up the principalmust not stipulate that he has something of the profit alone withoutthe agent sharing in it, nor must the agent stipulate that he hassomething of the profit alone without the investor sharing. In qirad,there is no sale, no rent, no work, no advance, and no conveniencewhich one party specifies to himself without the other party sharingunless one party allows it to the other unconditionally as a favourand that is alright to both. Neither of the parties should make acondition over the other which increases him in gold or silver or foodover the other party." He said, "If any of that enters theqirad, it becomes hire, and hire is only good with known and fixedterms. The agent should not stipulate when he takes the principal thathe repay or commission anyone with the goods, nor that he take any ofthem for himself. When there is a profit, and it is time to separatethe capital, then they divide the profit according to the terms of thecontract. If the principal does not increase or there is a loss, theagent does not have to make up for what he spent on himself or for theloss. That falls to the investor from the principal. Qirad ispermitted upon whatever terms the investor and the agent make a mutualagreement, of half the profit, or a third or a fourth or whatever." Malik said, "It is not permitted for the agent to stipulatethat he use the qirad money for a certain number of years and that itnot be taken from him during that time." He said, "It is notgood for the investor to stipulate that the qirad money should not bereturned for a certain number of years which are specified, becausethe qirad is not for a term. The investor loans it to an agent to usefor him. If it seems proper to either of them to abandon the projectand the money is coin, and nothing has been bought with it, it can beabandoned, and the investor takes his money back. If it seems properto the investor to take the qirad loan back after goods have beenpurchased with it, he cannot do so until the buyer has sold the goodsand they have become money. If it seems proper to the agent to returnthe loan, and it has been turned to goods he cannot do so until he hassold them. He returns the loan in cash as he took it." Maliksaid, "It is not good for the investor to stipulate that the agent payany zakat due from his portion of the profit in particular, becausethe investor by stipulating that, stipulates fixed increase forhimself from the profit because the portion of zakat he would beliable for by his portion of the profit, is removed from him. "It is not permitted for the investor to stipulate to the agent toonly buy from so-and-so, referring to a specific man. That is notpermitted because by doing so he would become his hireling for awage." Malik spoke about an investor in qirad who stipulateda guarantee for an amount of money from the agent, "The investor isnot permitted to stipulate conditions about his principal other thanthe conditions on which qirad is based or according to the precedentof the sunna of the Muslims. If the principal is increased by thecondition of guarantee, the investor has increased his share of theprofit because of the position of the guarantee. But the profit isonly to be divided according to what it would have been had the loanbeen given without the guarantee. If the principal is destroyed, I donot think that the agent has a guarantee held against him because thestipulation of guarantees in qirad is null and void." Malikspoke about an investor who gave qirad money to a man and the manstipulated that he would only buy palms or animals with it because hesought to eat the dates or the offspring of the animals and he keptthem for some time to use for himself. He said, "That is notpermitted. It is not the sunna of the Muslims in qirad unless he buysit and then sells it as other goods are sold." Malik said,"There is no harm in the agent stipulating on the investor a slave tohelp him provided that the slave stands to gain along with him out ofthe investment, and when the slave only helps him with the investment,not with anything else." Yahya said that Malik said, "No one should make a qirad loan except in coin, because the loan must not be in wares, since loaning wares can only be worked in one of two ways: Either the owner of thewares says to the borrower, 'Take these wares and sell them. Buy andsell with the capital realized according to qirad.' The investorstipulates increase for himself from the sale of his goods and whatrelieves him of expenses in selling it. Or else he says, 'Barter withthese goods and sell. When you are through, buy for me the like of mygoods which I gave you. If there is increase, it is between you andme. 'It may happen that the investor gives the goods to the agent at atime in which they are in demand and expensive, and then the agentreturns them while they are cheap and he might have bought them foronly a third of the original price or even less than that. The agentthen has a profit of half the amount by which the price of the wareshas decreased as his portion of the profit. Or he might take the waresat a time when their price is low, and make use of them until he has alot of money. Then those wares become expensive and their price riseswhen he returns them, so he buys them for all that he has so that allhis work and concern have been in vain. This is an uncertaintransaction and is not good. If, however, that is not known until ithas happened, then the wage an agent in qirad would be paid forselling that, is looked at and he is given it for his concern. Thenthe money is qirad from the day the money became cash and collected ascoin and it is returned as a qirad like that." Yahya said that Malik spoke about a man who made a qirad loan toa man and he bought wares with it and transported them to a commercialcentre. It was not profitable to sell them and the agent feared a lossif he sold them, so he hired transport to take them to another city,and he sold them there and made a loss, and the cost of the hire wasgreater than the principal. Malik said, "If the agent can paythe cost of the hire from what the capital realized, his way is that.Whatever portion of the hire is not covered by the principal, theagent must pay it. The investor is not answerable for any of it. Thatis because the investor only ordered him to trade with the principal.The investor is not answerable for other than the principal. Had theinvestor been liable, it would have been an additional loss to him ontop of the principal which he invested. The agent cannot put that onto the investor." Yahya said that Malik spoke about an investor who made a qiradloan to a man, who used it and made a profit. Then the man bought withall the profit a slave-girl and he had intercourse with her and shebecame pregnant by him, and so the capital decreased. Malik said, "Ifhe has money, the price of the slave-girl is taken from his property,and the capital is restored by it. If there is something left overafter the money is paid, it is divided between them according to thefirst qirad. If he cannot pay it, the slave-girl is sold so that thecapital is restored from her price." Malik spoke about aninvestor who made a qirad loan to a man, and the agent spent more thanthe amount of the qirad loan when buying goods with it and paid theincrease from his own money. Malik said, "The investor has a choice ifthe goods are sold for a profit or loss or if they are not sold. If hewishes to take the goods, he takes them and pays the agent back whathe put in for them. If the agent refuses, the investor is a partnerfor his share of the price in increase and decrease according to whatthe agent paid extra for them from himself." Malik spokeabout an agent who took qirad money from a man and then gave it toanother man to use as a qirad without the consent of the investor. Hesaid, "The agent is responsible for the property. If it is decreased,he is responsible for the loss. If there is profit, the investor hashis stipulation of the profit, and then the agent has his stipulationof what remains of the money." Malik spoke about an agent whoexceeded and borrowed some of what he had of qirad in money and hebought goods for himself with it. Malik said, "If he has a profit, theprofit is divided according to the condition between them in theqirad. If he has a loss, he is responsible for the loss." Malik said about an investor who paid qirad money to a man, and theagent borrowed some of the cash and bought goods for himself with it,"The investor of the capital has a choice. If he wishes, he shareswith him in the goods according to the qirad, and if he wishes, hefrees himself of them, and takes all of the principal back from theagent. That is what is done with some one who oversteps." Yahya said that Malik spoke about an investor who made a qiradloan to a man. He said, "When the investment is large, thetravelling expenses of the agent are taken from it. He can use it toeat and clothe himself in an acceptable fashion according to the sizeof the investment. If it saves him trouble, he can take a wage fromsome of the capital, if it is large, and he cannot support himself.There are certain jobs which an agent or his like are not responsiblefor, amongst them are collecting debts, transporting the goods,loading up and so forth. He can hire from the capital someone to dothat for him. The agent should not spend from the capital nor clothehimself from it while he resides with his family. It is only permittedfor him to have expenses when he travels for the investment. Theexpenses are taken from the capital. If he is only trading with theproperty in the city in which he resides, he has no expenses from thecapital and no clothing." Malik spoke about an investor whopaid qirad money to a man, and the agent went out with it and with hisown capital. He said, "The expenses come from the qirad and from hisown capital according to their proportions." Yahya said that Malik spoke about an agent who had qirad moneywith him and he spent from it and clothed himself. He said, "He cannotgive away any of it, and neither a beggar nor anyone else is to begiven any of it and he does not pay anyone compensation from it. If hemeets some people, and they bring out food and he brings out food, Ihope that that will be permitted to him if he does not intend tobestow something on them. If he intends that or what is like thatwithout the permission of the investor, he must get the sanction ofthe investor for it. If he sanctions it, there is no harm. If herefuses to sanction it, he must repay it with like if he has somethingwhich is suitable as compensation." Yahya said that Malik said, "The generally agreed on way of doingthings among us about an investor who pays qirad money to an agent tobuy goods, and the agent then sells the goods for a price to be paidlater, and has a profit in the transaction, then the agent dies beforehe has received payment, is that if his heirs want to take that money,they have their father's stipulated portion from the profit. That istheirs if they are trustworthy to take the payment. If they dislike tocollect it from the debtor and they refer him to the investor, theyare not obliged to collect it and there is nothing against them andnothing for them by their surrendering it to the investor. If they docollect it, they have a share of it and expenses like their fatherhad. They are in the position of their father. If they are nottrustworthy to do so, they can bring someone reliable and trustworthyto collect the money. If he collects all the capital and all theprofit, they are in the position of their father." Malikspoke about an investor who paid qirad money to a man provided that heused it and was responsible for any delayed payment for which he soldit. He said, "This is obligatory on the agent. If he sells it fordelayed payment, he is responsible for it." Yahya said that Malik spoke about an investor who gave qiradmoney to a man, and then the man sought a loan from the investor orthe investor borrowed money from the agent, or the investor left goodswith the agent to sell for him, or the investor gave the agent dinarsto buy goods with. Malik said, "There is no harm if the investorleaves his goods with him knowing that if the agent did not have hismoney and he had asked a similar thing of him, he would have stilldone it because of the brotherhood between them or because it wouldhave been no bother to him and that had the agent refused that, hewould not have removed his capital from him. Or if the agent hadborrowed from the investor or carried his goods for him and he knewthat if the investor had not had his capital with him, he would havestill done the same for him, and had he refused that to him, he wouldnot have returned his capital to him. If that is true between both ofthem and it is in the way of a favour between them and it is not acondition in the terms of the qirad, it is permitted and there is noharm in it. If a condition comes into it, or it is feared that theagent is only doing it for the investor in order to safeguard thecapital in his possession, or the investor is only doing it becausethe agent has taken his capital and will not return it to him, that isnot permitted in qirad and it is part of what the people of knowledgeforbid.' " Yahya said that Malik spoke about a man who loaned another manmoney and then the debtor asked him to leave it with him as a qirad.Malik said, "I do not like that unless he takes his money back fromhim, and then pays it to him as a qirad if he wishes or if he wisheskeep it." Malik spoke about an investor who paid a man qiradmoney and the man told him that it was collected with him and askedhim to write it for him as a loan. He said, "I do not like that unlesshe takes his money from him and then lends it to him or keeps it as hewishes. That is only out of fear that he has lost some of it, andwants to defer it so that he can make up what has been lost of it.That is disapproved of and is not permitted and it is not good." Yahya said that Malik spoke about an investor paying qirad moneyto an agent who made a profit and then wanted to take his share of theprofit and the investor was away. He said, "He should not take any ofit unless the investor is present. If he takes something from it, heis responsible for it until it is accounted for in the division of thecapital." Malik said, "It is not permitted for the partiesinvolved in a qirad to account and divide property which is away fromthem until the capital is present, and the investor is given theprincipal in full. Then they divide the profit into their agreedportions." Malik spoke about a man taking qirad money, andbuying goods with it while he had a debt. His creditors sought andfound him while he was in a city away from the investor, and he hadprofitable merchandise whose good quality was clear. They wanted himto sell the merchandise for them so that they could take his share ofthe profit. Malik said, "None of the profit of the qirad is takenuntil the investor is present. He takes his principal and then theprofit is divided mutually between them." Malik spoke aboutan investor who put qirad money with an agent and he used it and had aprofit. Then the principal was set aside and the profit divided. Hetook his share and added the share of the investor to his principal inthe presence of witnesses he had called. Malik said, "It is notpermitted to divide the profit unless the investor is present. If hehas taken something here turns it until the investor has received theprincipal in full. Then what remains is divided into their respectiveportions." Malik spoke about an investor who put qirad moneywith an agent. The agent used it and then came to the investor andsaid, "This is your portion of the profit, and I have taken the likeof it for myself, and I have retained your principal in full." Maliksaid, "I do not like that, unless all the capital is present, theprincipal is there and he knows that it is complete and he receivesit. Then they divide the profit between them. He returns the principalto him if he wishes, or he keeps it. The presence of the principal isnecessary out of fear that the agent might have lost some of it, andso may want it not to be removed from him and to keep it in his hand." Yahya said that Malik spoke about an investor who put qirad moneywith an agent who bought goods with it, and the investor told him tosell them. The agent said that he did not see any way to sell at thattime and they quarrelled about it. He said, "One does not look at thestatement of either of them. The people of experience and insightconcerning such goods are asked about these goods. If they can seeanyway of selling them they are sold for them. If they think it istime to wait, they should wait." Malik spoke about a man whotook qirad money from an investor and used it and when the investorasked him for his money, he said that he had it in full. When he heldhim to his settlement he admitted that "Such-and-such of it was lostwith me," and he named an amount of money. "I told you that so thatyou would leave it with me." Malik said, "He does not benefit bydenying it after he had confirmed that he had it all . He isanswerable by his confession against himself unless he producesevidence about the loss of that property which confirms his statement.If he does not produce an acceptable reason he is answerable by hisconfession, and his denial does not avail him." Malik said,"Similarly, had he said, 'I have had such-and-such a profit from thecapital,' and then the owner of the capital asked him to pay him theprincipal and his profit, and he said that he had not had any profitin it and had said that only so it might be left in his possession, itdoes not benefit him. He is taken to account for what he affirmedunless he brings acceptable proof of his word, so that the firststatement is not binding on him." Malik spoke about aninvestor who put qirad money with an agent who made a profit with it.The agent said, "I took the qirad from you provided that I would havetwo-thirds." The owner of the capital says, "I gave you a qiradprovided that you had a third." Malik said, "The word is the word ofthe agent, and he must take an oath on that if what he says resemblesthe known practice of qirad or is close to it. If he brings a matterwhich is unacceptable and people do not make qirads like that, he isnot believed, and it is judged to be according to how a qirad like itwould normally be." Malik spoke about a man who gave a manone hundred dinars as a qirad. He bought goods with it and then wentto pay the one hundred dinars to the owner of the goods and found thatthey had been stolen. The investor says, "Sell the goods. If there isanything over, it is mine. If there is a loss, it is against youbecause you lost it." The agent says, "Rather you must fulfil what theseller is owed. I bought them with your capital which you gave me."Malik said, "The agent is obliged to pay the price to the seller andthe investor is told, 'If you wish, pay the hundred dinars to theagent and the goods are between you. The qirad is according to whatthe first hundred was based on. If you wish, you are free of thegoods.' If the hundred dinars are paid to the agent, it is a qiradaccording to the conditions of the first qirad. If he refuses, thegoods belong to the agent and he must pay their price." Malikspoke about two people in a qirad who settled up and the agent stillhad some of the goods which he used - threadbare cloth or a waterskinor the like of that. Malik said, "Any of that which is insignificantis of no importance and belongs to the agent. I have not heard anyonegive a decision calling for the return of that. Anything which has aprice is returned. If it is something which has value like an animal,camel, coarse cloth or the like of that which fetches a price, I thinkthat he should return what he has remaining of such things unless theowner overlooks it."