Assalaamu alaykum dear Sirs, I am a business man. We agreed, my friend and I, to establish a business for supplying the companies with industrial materials; this type of business particularly depends on the cash flow for buying the materials and then sell them to the companies, and it also depends on business expertise and experience, like searching for new projects and some marketing and sales efforts. We agreed, my friend and I, that I would support and handle the cash flow needed until a specific amount, and we agreed that we should work together to get hold of some projects. After a year, I discovered that I was the only one who had been taking care of all the financial matters beyond the limit (I borrowed from my relatives, he can help but he never tries), and that I was the only one who had been taking care of all the marketing and sales and of visiting the companies and finding the new projects. Definitely, nothing had been done by him, neither financially, nor business wise. Our agreement was two-thirds of the profit for me and one-third for him. I really feel regret of making this decision as I am the only one who has suffered and done the hard work, financially and business wise, and, surely, I was like working alone. He is an employee and I am not. What advise can I get from your side? Should I cancel that contract or give him a specific amount?

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad is His slave and Messenger. 

What we understood from your question is that you agreed with your friend that each one of you would participate with his own money and work by himself and that you would share the profit as agreed between the two of you. This kind of partnership is permissible in principle, and it is called the ‘Anaan (i.e. co-operative freehand managing) partnership.

Ibn Qudaamah said in his book Al-Mughni in Section Five, “If two persons participate with their money and effort, then this is al-‘anaan partnership and it is a partnership agreed upon.”

But among the terms and conditions of a financial partnership generally is that the capital money in it should be a kind of asset that is present now and not absent.

The Fiqh Encyclopedia reads: 

“The terms and conditions of a any financial partnership, i.e. whether it is a mufaawadhah (fully equal authorization) partnership, equality in profit is a must, and any difference in profit renders the contract of this partnership invalid.) or an ‘anaan partnership:

The first condition:

The capital should be present item (kind of asset) and not a debt, because the trade by which the purpose of the company is achieved, which is the profit, is not achieved by debts. Considering the debts as the company's capital contradicts its purpose.”

Ibn Qudaamah said in Al-Mughni, “The partnership is not permissible with absent kind of asset or with a debt because it is not possible to use it at the present time, which is the purpose of the company.”

This term and condition is lacking in the partnership between you and your partner – as is clear – and, therefore, the partnership that has been concluded between the two of you is void and should be dissolved.

When the partnership is dissolved, then each partner gets his capital money, and the profit shall be divided accordingly, and both shall bear the loss, if any, accordingly as well.

Ibn Qudaamah said, “When the partnership is void, then the two partners should divide the profit according to their capital money, and each one of them would take from the other compensation for their labor (actual work done by themselves).”

Since your partner did not pay anything and did not do any work as well – according to what you mentioned – then he is not entitled to anything.

As for the fact that your friend is employed while you are not, then this does not affect what we have mentioned above.

Allaah knows best.