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Fatwa CenterA controversial brokerage partnership
Question
We have business partnership with a person who is G.M marketing in one factory.He has connections all over the world from his previous job.We have agreed to work for him and registered a company in my name as commission agents.He bring orders from abroad and fulfill those orders from his factory on market rates and charge 3% commission from factory where he works. For our part of work i.e communicating with their factory and doing inspection of goods we get around 16% of money earned and he deals in buyer (foreign side). What would be ruling on our earnings. Secondly they purchase yarn for making fabric their product which is exported.Purchase of yarn is also done through agents.He introduced us as agents in his company and on his recommendation that we r selling their fabric they are buying yarn through us from sellers.In this case we offer them almost full services of what other agents give but in earnings he also takes 2/3 rd share.What will be ruling of our earning in this case also. Please reply.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
The partnership you described has different forms of brokerage contracts which revolve around a single aspect, which is that your partner who is the general manager of marketing in a factory introduced you to the factory in which he works to market for it certain commodities (goods/fabric) or to sell to it certain commodities (yarn) as well. Hence, we have to consider that partner in two ways: Firstly, he is an employee at his factory and a responsible agent for marketing its commodities. Secondly, he also sells to that factory because he is a partner in the brokerage company.
Accordingly, we say that if that company has full knowledge of the details of that matter and allowed the buying and selling of that person through his company, then the matter is permissible and there is no harm in that, according to the most preponderant opinion. However, if that company does not know about the details of that matter, then it is not permissible for that person to be an agent for that company and at the time he buys from it for himself or sells to it from himself.
Remember that brokerage is based on mediation between the seller and the buyer to bring about a sale. So, there is nothing wrong with taking commission for that from the seller and buyer or from one of them if this is done according to a certain tradition or condition. For more benefit, please refer to Fatwa 82302.
As for what you have mentioned that brokers distribute commission among them on different percentages on which they agree, then there is nothing wrong with that as long as there is mutual consent among them.
With regard to making the fees of the broker a percentage not a certain sum of money, then scholars hold different opinions regarding it. Anyway, there is no harm in adopting the opinion of those who allowed it to remove difficulty.
For more benefit, please refer to Fatwa 119330.
Allaah Knows best.
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