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(Book 32, Hadith 3) #36446
Conditions of Qirad Loan

SUMMARY: The hadith explains the accepted and permitted form of qirad, which is a type of loan, and the conditions that come with it.

Malik said, "The recognized and permitted form of qirad is that a man take capital from an associate to use. He does not guarantee it and in travelling pays out of the capital for food and clothes and what he makes good use of, according to the amount of capital. That is, when he travels to do the work and the capital can support it. If he remains with his people, he does not have expenses or clothing from the capital". Malik said, "There is no harm in the two parties in a qirad helping each other by way of a favour when it is acceptable to them both". Malik said, "There is no harm in the investor of the capital buying some of the goods from the agent in the qirad if that is acceptable and without conditions". Malik spoke about an investor making a qirad loan to a man and his slave, to be used by both. He said, "That is permitted, and there is no harm in it because the profit is property for his slave, and the profit is not for the master until he takes it from him. It is like the rest of his earnings".

TOPICS
loan  *  capital  *  associate  *  profit  *  qirad

QUICK LESSONS:
Take capital from an associate to use according to agreed upon terms; help each other by way of favour if mutually agreed upon; buy goods from agent without conditions if mutually agreed upon; make sure profits are property for slaves until taken by them or their master.

EXPLANATIONS:
This hadith discusses the accepted and permitted form of qirad, which is a type of loan. It explains that when taking capital from an associate to use, one does not guarantee it but pays out for food and clothes while travelling according to the amount of capital. It also states that there is no harm in both parties helping each other by way of a favour if they both agree to it. Furthermore, it mentions that there is no harm in the investor buying some goods from the agent without any conditions as long as they are both okay with it. Lastly, Malik speaks about an investor making a qirad loan to a man and his slave where he states that this is allowed since any profit made will be property for his slave until taken by him or her.

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