Can a business partner reinvest the profits?

CAN A BUSINESS PARTNER REINVEST THE PROFITS?

Question:

A few months ago, I entered a partnership with a friend to buy a specific piece of land which would be sold once the price was right. He arranged for 75% of the capital, and I arranged for the remaining 25%. After the land was sold, we agreed that my profits would be returned to me periodically. After one payment, I was told that my profits were actually invested in a second venture. This was done without my permission. Do I have the right to demand my profits be returned to me immediately? Does he have the right to use the profits to invest in another piece of land?

Answer

بسم الله الرحمن الرحیم

The contract which you entered into with your friend was a Mushārakah contract. This is where several partners invest some capital into a venture and then share the profits at an agreed ratio. In your case you had appointed your friend as the agent to execute the purchase of the land. This means it was a restricted agency [wakālah muqayyadah].

In this type of agency, the money which the agent handles falls under the ruling of entrusted property [wadīʿah] This means that if the money is lost without the wrong doing of the agent, there is no liability upon him. However, if the wealth was lost due to their negligence, then they are liable to pay back.

As such, once the land was sold and the profits accrued, your money should have been returned to you. As this was not done and the money was invested elsewhere without your consent, he is liable to return all of your profits whenever you demand so.[1]

And Allah knows best

Ibrāhīm ibn Muḥammad

[1] قال الكاساني (المتوفى سنة 587هـ): فالتوكيل بالشراء لا يخلو إما أن كان مطلقا أو كان مقيدا، فإن كان مقيدا يراعى فيه القيد إجماعا لما ذكرنا، سواء كان القيد راجعا إلى المشترى أو إلى الثمن، حتى إنه إذا خالف يلزم الشراء إلا إذا كان خلافا إلى خير فيلزم الموكل (بدائع الصنائع: 29/6)

وقال: المقبوض في يد الوكيل بجهة التوكيل بالبيع والشراء وقبض الدين والعين وقضاء الدين – أمانة بمنزلة الوديعة، لأن يده يد نيابة عن الموكل بمنزلة يد المودع، فيضمن بما يضمن في الودائع، ويبرأ بما يبرأ فيها (بدائع الصنائع: 34/6)

وجاء في مجلة الأحكام: المال الذي قبضه الوكيل بالبيع والشراء وإيفاء الدين واستيفائه وقبض العين من جهة الوكالة في حكم الوديعة في يده، فإذا تلف بلا تعدٍّ ولا تقصير لا يلزم الضمان (شرح المجلة: 784)