With regards to Business Partnerships..
Partner A: Is the investor and Partner B: Is giving his skills and labour.
If Partner A dies, then this would nullify the partnership.
What will happen with the money invested in the business and also if the business was a profitable one?
Can the family of Partner A benefit from the partnership?
A Brief Answer:
Ash-Shaykh Muhammad bin Saalih al-Uthaymeen, rahimahullah, commented on the following speech found in the madhab of Imam Ahmad:
فإن مات أحدهما فلوارثه إتمام الشركة فيأذن للشريك ويأذن له الشريك في التصرف لأن هذا إتمام للشركة وليس بابتداء لها فلا تعتبر شروطها وكذلك إن مات رب المال في المضاربة فلوارثه إتمامها في ظاهر كلامه ويحتمل أن لا يجوز إتمامها إلا أن يكون المال ناضا لأن العقد قد بطل بالموت
“If one of the two partners passes away, then the inheritors (i.e. the family) could resume the partnership. Therefore, they would grant authorization for the other partner since this is merely resuming the partnership and it is not considered to be renewing it…Likewise, if the investor (i.e partner A) passes away, then from what is apparent of his speech (al-Imam Ahmad) is that they are allowed to resume it. Also, it is possible that it may not be permissible since the contract becomes void by the death of the person except in a case if the money has already been brought forward…”
Ash-Shaykh al-Uthaymeen rahimahullah comments by saying:
لم يتبين لي رجحان في الاحتمالين، لأنها عقد جائز إذا شاءوا أمضوها مع الوارث وإن شاءوا فسخوا.
“It hasn’t become clear to me that either of the two possibilities outweighs the other being it is a legitimate contract. Therefore, if they wish they can continue it (the business) with the inheritor and if they wish they could terminate it. ”
A Side Note: The inheritors of partner A will become the new owners for the capital sum along with their share of the profit if there is any profit in the business. Also if the partnership is terminated and partner B has put labour into the business, then he should be given an amount of money for his labour according to what is usually given for such work. And Allah knows best.
AbdulFattaah Bin Uthman