Partnership and Profit in Medieval Islam
By ABRAHAM L. UDOVITCHPRINCETON UNIVERSITY PRESS
Copyright © 1970 Princeton University Press
All right reserved.ISBN: 978-0-691-03084-5Contents
PREFACE...............................................................viiI. INTRODUCTION.......................................................3II. PROPRIETARY PARTNERSHIP (Sharikat al-milk.........................17III. THE HANAFI MUFAWADA PARTNERSHIP..................................40IV. HANAFI LIMITED INVESTMENT PARTNERSHIP ('Inan).....................119V. MALIKI PARTNERSHIP.................................................142VI. THE COMMENDA (Mudaraba, Qirad, Muqarada)..........................170VII. ISLAMIC LAW: THEORY AND PRACTICE.................................249BIBLIOGRAPHY..........................................................263GLOSSARY..............................................................273INDEX.................................................................277Chapter One
Introduction
Commercial Law and Economic History
From the point of view of economic history, the ideal way to study any institution of commercial law would be to compare the information contained in legal codes and treatises with the material relating to its application in economic life as manifested by actual contracts, letters, and business records found in archives and other repositories. In the case of the early centuries of the Islamic period, available sources unfortunately preclude such a procedure. Theoretical legal texts exist in abundance, but any corresponding documentary material is for all practical purposes non-extant. In order to determine the framework in which the trade and commerce of the early Islamic period was carried on—a trade known to have been active and important—we must of necessity rely on legal treatises for most of our information, while trying wherever possible to call upon whatever meager help other literary sources may provide.
In the absence of documentary and similar sources, the possibility of investigating the quantitative aspects of trade is all but eliminated. However, in those areas of trade which have been described as qualitative, such as the variety of goods exchanged, the specialization of the merchant class, and the complexity of business methods, legal and other literary sources provide a great deal of valuable information. It is with the institutions of partnership and commenda in the early Islamic period, two of the qualitative components of trade, that this study will be concerned.
Pooling resources, whether in the form of cash, goods, skills, or a combination of these, is one of the indispensable components of any extended commercial activity. In Islamic law, the partnership and commenda contracts are the two basic legal instruments by which this can be accomplished. Joseph Kohler, an eminent legal historian of the early part of this century, has asserted that the decline of Islamic commercial hegemony in the Middle Ages was due in a large part to the limitations placed by Islamic law on the development of associative relationships. Whether the role of commercial legal institutions was as decisive in the economic history of the medieval Near East as Kohler suggested is open to discussion; there can be no question, however, that the institutions of Islamic commercial law are factors to be considered before any judgment can be made concerning the economic growth and decline of the medieval Muslim world.
Historians of the commercial law of the medieval West generally agree that legal techniques not only reflected but also influenced economic practices. If we assume at least the same for the medieval Muslim world, then, in spite of the absence of archival documents, a thorough investigation of the major institutions of Islamic commercial law will not only be a chapter of "Handelsrechtsgeschichte," but may also serve as an indicator of the level and complexity of those fields of economic activity in which the institution was applicable.
Islamic Law and Practice
From the outset, one confronts the rather complex question of the nature of the shari'a (Islamic sacred law) and the fiqh (Islamic jurisprudence), and the corollary problem of the propriety of using Muslim legal treatises as a source for the investigation of economic and social institutions. Any assumed harmony between medieval Islamic law and the actual practice of that period has been brought into serious question, and even completely denied by severaleminent Islamists.
Beginning with the mid-nineteenth century, translations of a number of fiqh manuals into European languages made Islamic legal material available for the first time to Western legal historians and comparative legal scholars. Some of these translations were of questionable accuracy, and the non-Arabist legal scholars treating the material were unable to compensate for this deficiency by referring back to the original sources. In addition, these scholars approached the corpus of Islamic religious law on the assumption that it was a determining factor in the actual practices of the Muslim world, and attempted to impose some consistency within the material by applying their own concepts of legal classification to it. Two of the leading orientalists of the day, C. S. Hurgronje and I. Goldziher, reacted to what they considered to be a misconception and abuse of fiqh material by attempting to provide an analysis of the fiqh in its Islamic historical context.
Fiqh in their view is not, strictly speaking, law, and any attempt to treat it as such would inevitably be misleading. It is, rather, a religious doctrine of duties (Pflichtenlehre) claiming jurisdiction over every aspect of human life. The most important problems of civil, ritual, and criminal law are, in this respect, on the same level as formulae of greeting and amenities of table manners. Those aspects of life which the law encompasses in other societies and cultures form only one part of the fiqh and, therefore, according to this view, any purely legal approach to fiqh would lead to misunderstanding.
Furthermore, the fiqh had very little to do with actual practice. It was only of theoretical significance and was developed by the religious scholars according to the paradigm o£ what they considered to be a golden age, namely, the period of the first four caliphs. The religious-legal scholars saw their task as that of creating an ideal doctrine of how things ought to be; and the fact that things were not as they ought to be can be amply documented by the numerous references to transgressions of the law. The law was destined for the ideal society and did not take into account the needs of a corrupt world. As Hurgronje summed it up: "... all classes of the Muslim community have exhibited in practice an indifference to the sacred law in all its fulness, quite equal to the reverence with which they regard it in theory." By implication, he also ruled out the use of legal material as a source for any study except that of the development of Islamic theoretical legal doctrine as one of the important elements of Muslim intellectual life.
The works of Goldziher and Hurgronje on the nature and origins of Islamic law and jurisprudence were a great advance in their own day both in indicating how this material should be approached and in showing that the conventional Muslim view concealed rather than revealed the truth. Their view of the origins and formative period of Muslim law and jurisprudence has since been revised by the detailed research of J. Schacht. However, the judgment of these scholars on the relationship of law to practice and on the validity of legal material as an acceptable source for the social and economic history of Islam, while somewhat modified, has not been subject to any systematic reappraisal. Even though a significant amount of new material bearing on this problem has come to light in the past fifty years, it has not been systematically collected and studied with this problem in mind. An investigation of this nature would, of course, be a subject deserving of a separate study; but, in view of its importance to the present discussion, some of the more relevant material and ideas toward such a re-evaluation deserve mention here.
That the separation between fiqh and life was not absolute is conceded by all. In every generation there were groups of pious men whose entire lives were guided by the prescriptions of the sacred law. On a broader level, certain segments of the fiqh actually had wide application, especially those dealing with ritual and family law. It has become increasingly clear that this distinction between the ideal law and the profane practice did not apply with equal force to all segments of the fiqh. G. Bergsträsser was, I believe, the first one to point out that the adherence of Muslim peoples to the various aspects of the fiqh varied greatly according to time and place, and that the study of Islamic law and history was not yet at an advanced enough stage to pronounce the final word on the problem of law and practice.
He did, however, distinguish three broad categories: (i) Ritual, family, and inheritance law, which, notwithstanding occasional deviations based on custom, adhered closest to the fiqh; (2) Constitutional, criminal, and fiscal law, which diverged farthest and, in some cases, completely from the fiqh; and (3) Commercial law, which falls somewhere between the two above extremes. This evaluation of the position of Islamic commercial law vis à vis practice stands in sharp contrast to its earlier appraisal by Hurgronje: "Islamic commercial law remained for the most part a dead letter; the great Ghazzall, 'the reviver of religion,' said in the eleventh century of our era that anyone conducting commerce in accordance with the law was looked upon as ridiculous by all other merchants."
While recognizing the ideal character of Islamic law, one cannot state a priori that any given institution had no relationship whatsoever to practice. This is especially so in the area of fiqh termed mu'amalat—pecuniary transactions. Most of the material covered by these laws, for example the contracts of partnership and commenda, does not involve any religious or moral principle. No religious or ethical value is attached to them. In the earliest legal texts especially, there is no reason not to consider them as a reflection and partial description of institutions as they existed at that time.
One must also bear in mind that, while the commenda was apparently a commercial form original with the Arabs, an institution like partnership was not an innovation of, or in any way peculiar to, Islamic law. It was known and practiced in the Near East at least since the Babylonians. It was known and discussed in the Talmud, and it is treated in the Corpus luris Civilis of Justinian. It appears almost certain that various forms of business association were practiced by Meccan merchants in the period immediately preceding Muhammad. Gaonic responsa of the ninth and tenth centuries amply testify to the use of both partnership and commendas by Jewish merchants living under Muslim suzerainty. Partnership and commenda alike were known, accepted legal commercial institutions in the medieval Muslim world; in the absence of contrary evidence, we are justified in assuming they were extensively employed in trade.
Although the published Arabic papyri contain, as far as I know, no example of a commercial partnership or of a commenda agreement, they do contain examples of other types of business contracts mentioned in the fiqh. The formal similarity of papyri documents from different places and different times indicates beyond a doubt that they followed a uniform legal content. Papyri evidence also indicates that in many cases a contract was written in several copies; this parallels the instructions contained in some of the earliest fiqh works. If, then, as the papyri evidence suggests, various types of contracts generally followed the prescriptions of the relevant sections of the fiqh, we can expect the same to be true of partnership and related contracts.
The extent to which Islamic law made an accommodation with customary commercial practice is evidenced by the very existence of an entire genre of legal writings known as the shurut (legal formulae) literature. From a very early period, Islamic legal theory, diverging from an explicit Qur'anic ruling, denied the validity of documentary evidence and restricted legal proof to the oral testimony of witnesses. In spite of this, religious lawyers took cognizance of the indispensability of written contracts to commerce by composing formularies. These were intended to serve as handbooks for notaries, and provide the forms for a great variety of practical needs. They had only to be witnessed to be legally valid.
The earliest extant shurut works are those of Tahawi (d. 321/933). This genre of legal literature, however, goes back to the "founding fathers" of the Hanafi school, Abu Hanlfa (d. 150/767), Abu Yusuf (d. 182/798), and Shaybani (d. 187/803). Indeed, Indeed, the "Book of Partnership" of Shaybani's Kitab al-asl, the earliest legal compilation of the Hanafi school, begins with a suggested formula for writing a partnership contract. Formulae for various types of specialized partnerships are cited throughout the book, forming an integral part of the legal exposition of partnership. The inclusion of contract formulae within the very body of the early fiqh texts is one very significant manifestation of the degree to which customary commercial practice was assimilated into, and is reflected by, the theoretical legal works.
In most areas of business law, the fiqh allowed considerable leeway to traders and investors and, on the whole, probably provided adequate legal instruments for the commercial needs of the early Islamic period. Islamic law did, however, place some serious restrictions and limitations on the freedom of commercial activity. It is undoubtedly against the prohibitions which grew out of these restrictions that the transgressions of merchants, which Ghazzali and others complained about, took place. In this respect, we can agree with Schacht's statement that "the hostile references to the practice in treatises of Islamic law are one of our main sources for its investigation."
The restrictions in the area of trade and exchange, as well as in other areas of life, placed certain aspects of practice on an inevitable collision course with legal theory. This situation gave rise to a special branch of legal writings, the hiyal (legal devices) literature, in which the lawyers attempted to narrow down the area in which actions would be in violation of the law by making them conform to the law formally while in reality circumventing it.
"They (hiyal) can be described in short as the use of legal means for achieving extra-legal ends—ends that could not be achieved directly with the means provided by the shari'ah, whether or not such ends might in themselves be illegal. The 'legal devices' enabled persons who would otherwise have had to break the law, or under the pressure of circumstances would have had to act against its provisions, to arrive at the desired result while actually conforming to the letter of the law." Thus, for example, a number of devices were developed to circumvent the taking or giving of interest, and others to permit capital in the form of commodities to serve as investments in partnership and commenda contracts.
(Continues...)
Excerpted from Partnership and Profit in Medieval Islamby ABRAHAM L. UDOVITCH Copyright © 1970 by Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
