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What is the Sharia and legal characterization of a clause in a partnership agreement that guarantees a minimum monthly profit for one of the partners, with any shortfall considered an advance to be deducted from the final profits?

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The Sharia and legal characterization of a clause in a partnership agreement that guarantees a minimum monthly profit, with any shortfall considered an advance, varies. On one hand, it might be viewed as a religiously prohibited (haram) profit guarantee, rendering the contract void (batil), as profit in partnerships must not...

The Sharia and legal characterization of a clause in a partnership agreement that guarantees a minimum monthly profit, with any shortfall considered an advance, varies. On one hand, it might be viewed as a religiously prohibited (haram) profit guarantee, rendering the contract void (batil), as profit in partnerships must not be guaranteed. On the other hand, if the clause explicitly states that the amount is an advance to be deducted from the final profits, it might be considered a binding advance rather than a prohibited profit guarantee.
Source: Radiif.com (رديف) · Saudi Legal AI Platform

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