Does the partnership terminate upon death?
Question:
Assalamu Alaykum. Hope you are well Mufti Saheb. If one partner passes away from the business which includes 3 other partners. Does the entire partnership dissolve or only his share? According to what I remember its only his share.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
In essence, in a voluntary business partnership, the laws of Shirkah al-Aqd will be applicable. Therefore, if any of the partners passes away, then his partnership share only is terminated and ceases due to his demise. The original partnership/Shirkah does not terminate. However the heirs have a choice to either seek a constructive liquidation of the deceased’s partnership share or continue to participate in the partnership/Shirkah.
Nevertheless this construct is not the same as a Shirkah al-Milk in which the joint heirs become part of a Shirkah al-Muhaya’ah/Shirkah Ghair Ikhtiyari/Bil Jabr in which the joint heirs become joint and severable partners in the joint business/asset (Al-Mughni, Ibn Qudamah and Islamic Law of Commerce by Moulana Mujeebullah)).
and Allah Ta'ala Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee
Darul Iftaa, Durban, South Africa
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