How should profit and loss be shared in a partnership?

“The arrangement in the queried scenario is not permissible. In a partnership, the expenses are first settled from the income accrued. The nett profit will then be divided between the two partners on a 50/50 basis, since they have enacted a partnership on a 50/50 basis.”

“Such a partnership is valid. However, after the crops are harvested, then each partner should take his 50% share from the crop. If thereafter, they both wish to sell their portion of the crop individually, they may do so.”

“According to the Hanafi Madh’hab, in a partnership, the capital has to be in cash form from both partners. If one partner provides cash and the other partner provides kind such as machinery, then such a partnership will not be valid.”

“Scenario 1: According to our understanding, the nature of this partnership is Shirkah al Amwaal and not Mudhaarabah. This is because in a Mudhaarabah arrangement, the Rabbul Maal (investor) provides the capital while the other partner or partners contribute work without investing.”