Definition

Al-Sarkhasi in Mabsut Vol II (May Allah have mercy on him) defines sharikat al-Wujooh as ''…a partnership of two people with capital upon the condition that they will buy on credit and sell (for cash). It has been called by this name on the grounds that they employ their credit-worthiness, because credit sales are made only to those who have a standing among the people (traders).''

The Hanbali jurist Al-Bahuti (May Allah have mercy on him) in Kashshaf al-Qinaa Vol 3 defines it as ''the purchase on credit of two persons of something whose profits they share on the condition of half or third or the like, as agreed.''

Shaikh Taqiuddin an-Nabhani (May Allah have mercy on him) in his book The Economic System in Islam states that Wujooh has two forms:

Firstly the association of two people’s effort with the property of a third, i.e. a person gives his property to two persons or more as a Mudharaba, so the two mudharibs(worker) are partners in the profit through the property of another person.

The second form of Wujooh is when two or more persons associate in what they buy using the (financial) trust of merchants in them, and the reputation that is based on this (financial) trust, without having any property themselves (i.e. buy on credit).

Profit and Loss

In the first form the partners may agree to divide the profit in thirds i.e. to each mudharib(worker) a third and to the owner a third. They may also agree to divide it in fourths, where the owner of the property takes a fourth, one of the mudharib takes a fourth and the other takes a half. Or they may agree on conditions other than these.

It is also permitted for the workers to make a claim for preferential shares of the profit. Their claim to preferential shares of profit is based on their reputation (Wajaha) of one or of both of them, whether in regard of their profession in work or of their skills in disposal and management, despite the fact that the right of disposal they have in the property is equal. This company is therefore different from the company of Mudharaba, although in reality it reverts to Mudharaba.

In the second form of Wujooh the partners agree that any goods they bought in the course of their business is owned by them in halves or thirds or fourths or whatever else they agree, which they then sell for profit. What they gain of profit from selling the goods is divided between them in halves, thirds or fourths or whatever else they agree, and not based on each partner’s share of the ownership.

However, the loss is in proportion of their shares of the purchased goods, because these shares represent their property and not according to what they may agree about the loss, nor according to their share of the profit, whether the profit was divided between them according to the value of their purchases or otherwise. This second form is similar to Abdan because two or more persons associate without having property.

Al-Bahuti (May Allah have mercy on him) states in Kashshaf al-Qinaa Vol 3 that the profit is shared by the partners in accordance with the ratios agreed upon, while the loss follows the ratio of ownership in what is purchased.

Evidences


Shaikh Taqiuddin an-Nabhani (May Allah have mercy on him) mentions that the company of the Wujooh with its two forms is allowed. This is because if the partners associated with the property of another person it is like the Mudharaba company, which is confirmed by the Sunnah and Ijma'a. If, however they associated with what they take from the property of another person, by buying goods through their reputation and the trust of the merchants in them, then it is like the company of Abdan, which is also confirmed by the Sunnah. The company of Wujooh is thus confirmed by the Sunnah and Ijma'a.

The Meaning of Trust

Shaikh Taqiuddin an-Nabhani elaborated on the meaning of trust. When trust is mentioned in the matters of trading and company matters and the like, he said it is meant to be the trust in payment, which is the financial trust, not a person’s notability, fame nor esteem. A person may be a notable person yet he is not trusted to pay, so there is no financial trust in him and he is not trusted in the subject of trading and partnership. He could be a minister, a rich man or a well known merchant, but if he is not trusted to pay, there is no financial trust in him nor is he trusted in anything. Therefore, he cannot buy any goods from the market without paying its price i.e. he cannot buy on credit. Yet a person could be a poor person, but if the merchants trust him to pay his debts, he can buy goods without paying their price immediately. In the company of Wujooh, the trust is thus focused on payment not on notability.

What occurs in some companies is that a minister of the government is included as a member in the company and assigned a certain share of the profit, while he contributes no property nor participates with any effort. He is associated as a partner not due his financial trust but his standing in society, so as to make easy the dealings of the company. This is not considered as a wujooh company nor does the definition of any company in Islam apply to it. This type of partnership is not allowed and such a person is not a partner and he is not allowed to take anything from such a company.

Also what happens in some countries like Saudi Arabia and Kuwait is that the non-Saudi or the non-Kuwaiti person is not allowed to have a license for trading or work unless he has a Saudi in Saudi Arabia or a Kuwaiti in Kuwait as a partner. He therefore assigns to him a share of the profit, while the Saudi or Kuwaiti person does not contribute any property or his effort to the company, rather he is only considered a partner because the licence is issued in his name and he is given a share in the profit in return for this. This type of company is also not considered of the company of wujooh, nor is it allowed by Shar'a. Such a Saudi or Kuwaiti is not considered a partner and it is not Halal for him to take anything from the company, because he does not fulfil the conditions which the Shar'a requires in the partner in order to become a legal partner. These conditions include associating 1) in the property or 2) by his body or 3) by the trust in payment, so that he works with the goods he takes through this trust.