Am I Required to Return Capital After a Partner’s Death?

Answered by Shaykh Muhammad Carr

Question

A man invested in my cryptocurrency trading business, fully aware of the associated risks. We agreed to split any profits equally. There was no verbal or written agreement categorizing the investment as a loan or stipulating any obligation to repay it. During his lifetime, he accepted the incurred losses without objection.

However, after his death, his family is now claiming that I owe the original investment amount based on a note he left behind. From an Islamic legal perspective, am I obligated to repay this amount?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

I pray you are in good faith and health. Thank you for your question.

“Verily Allah charges all of you to faithfully deliver trusts to those to whom they are due.” [Quran, 4:58]

Per the laws of an en-commandite partnership (mudaraba), you must return the capital amount invested or what remains thereof if there was a loss.

En commandite partnerships automatically terminate when either of the contracting parties dies. Khatib says,

“If either party dies, becomes insane, or falls unconscious, the contract is terminated. Upon termination, the working partner must liquidate the assets and settle the partnership.” [See: Khatib, Mughni al-Muhtaj]

Your Arrangement

Your arrangement with the deceased was an en commandite partnership (qirad). Qirad is a contract where one party (the capital provider) gives a sum of money to another party (the agent or working partner) to trade with it, and any profit is shared between them according to a pre-agreed ratio. Losses, if any, are borne solely by the capital provider unless due to the agent’s negligence or breach of contract.

Recommendation

In light of the partnership’s termination and the responsibility to return the capital, we encourage you to pursue a path of sulh (mutual settlement and reconciliation) with the heirs of the deceased. A spirit of cooperation, transparency, and goodwill in resolving outstanding matters not only protects everyone’s rights but also brings about barakah and healing.

If difficulties arise in resolving, it is advisable to seek the assistance of a qualified mediator or arbitrator with knowledge of Islamic commercial law. Their guidance can help clarify rights and obligations, facilitate understanding, and ensure a fair and amicable outcome.

As the Prophet (Allah bless him and give him peace) said,

“Shall I not inform you of something more excellent in degree than fasting, prayer, and charity?” They said, “Yes.” He said, “It is putting things right between people (sulh), for discord is the shaver (of religion).” [Tirmidhi]

I pray this is of benefit.
And with Allah alone is our success.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.