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Business complications with Muslim brother

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  • Business complications with Muslim brother

    I will keep this as concise as possible and will leave out details as it is not relevant to the question and would take a lot of time and explanation.

    I told a Muslim brother I knew of a business idea I would start up that involved a set of skills only I possessed. I told him it would cost me $5000 to get the business started and all I would have to do is take the bus to the location I have my business and dedicate some time to it. It would also take me a few months to get things setup before there would be any profit made. After telling me this he begged to be my partner in the business. He offered to pay for half of the business as well as give me rides with his car rather than having to take the bus. I told him no the first 100 times, explaining that I didn't need him to give me a ride and me taking a sum as small as $2500 in order to start giving him a percentage of my profits would not be worth it for me. He begged and begged and begged until I caved and finally agreed. He is a good friend of mine, so I decided helping him out and giving him a small portion of the profit wouldn't hurt.

    The original agreement was he pays half and gives me a ride 3 days a week and he would receive 16% of the business. The first month at least he would give me the 3 rides a week, but I'm not sure how much they helped. 100% of the time he came to pick me up he was late because of "traffic." Sometimes he would run errands before taking me there, sometimes he comes and picks me up while running on his reserve tank, and sometimes he would just miss the exit 4 times in a row. Whatever the excuse, it was never a simple drive from point A to point B. The second month he barely showed up to give me any rides. Maybe once a week, but otherwise he made an excuse or just ignored me. After confronting him about it he said he could no longer come to give me a ride 3 times a week. That's why he wasn't able to come get me the past month and once a week is all he could do. I explained to him that allowing him in the business was a favor and that it wasn't really helping me to take me one day a week. After complaining again I agreed once a week was fine, but he would only get 8% of the business.

    Now, he hasn't come in two week and would like to re-re-negotiate the terms. So, Islamically, what do I owe him and what are my options? I don't want to upset Allah in this transactions, but I don't feel he has left me with many options. What would it look like if a) I wanted to buy him our or b) How would i re-negotiate the terms

  • #2
    Re: Business complications with Muslim brother

    Anyone have any input?

    Comment


    • #3
      Re: Business complications with Muslim brother

      Bump?

      Comment


      • #4
        Re: Business complications with Muslim brother

        Not sure to be honest...half the money has been given and yet he has violated his part of the agreement.
        Is this is proper legal agreement or just an informal one between yourselves?

        Best to buy him out if he agrees. Then part ways. Unreliable and uncommitted are the last characteristics you want in a business partner.

        If that's not possible, then minimise his % of the business as much as you can, stop getting lifts of him, and talk about a buyout clause.
        So for example, the money he has given is for say 5% of the business or something. Then when you start turning a profit, the business would be worth more, then you can buy out his share for more than he invested. That way he turns a decent profit and it wont' affect your friendship.

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        • #5
          Re: Business complications with Muslim brother

          I think you should pose this question to a shaikh lest you be responsible for unintentionally absorbing some his share, even if it's as little as a couple of pennies. You have a legal binding agreement which he's breached several times.

          Comment


          • #6
            Re: Business complications with Muslim brother

            Originally posted by Sabros View Post
            Not sure to be honest...half the money has been given and yet he has violated his part of the agreement.
            Is this is proper legal agreement or just an informal one between yourselves?

            Best to buy him out if he agrees. Then part ways. Unreliable and uncommitted are the last characteristics you want in a business partner.

            If that's not possible, then minimise his % of the business as much as you can, stop getting lifts of him, and talk about a buyout clause.
            So for example, the money he has given is for say 5% of the business or something. Then when you start turning a profit, the business would be worth more, then you can buy out his share for more than he invested. That way he turns a decent profit and it wont' affect your friendship.
            Buying him out means giving him his money back or more. My issue with that is then there is not penalty for him breaking the contract. It was a no risk investment to him and caused me a lot of time and stress I would not have had otherwise.

            I could minimize his percentage, but that would really bother him because at that point he would get so little it would not really be worth his original investment. He was already not happy to get 8% because that's really only worth the investment longer term, which our agreement is not.

            Either one of us getting upset aside, if we were not friends, what would be the most fair thing to do. I play on being more than fair to him in the end, but I'd like to know what everyone is entitled to

            Comment


            • #7
              Re: Business complications with Muslim brother

              Originally posted by TurningTables View Post
              I think you should pose this question to a shaikh lest you be responsible for unintentionally absorbing some his share, even if it's as little as a couple of pennies. You have a legal binding agreement which he's breached several times.
              I would love to, but all the scholars here are Arabic speakers and my Arabic is very weak

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              • #8
                Re: Business complications with Muslim brother

                Originally posted by newmuslimguy View Post
                I would love to, but all the scholars here are Arabic speakers and my Arabic is very weak
                Try brother Darul ilm. http://www.ummah.com/forum/member.php?105052-Darul-Ilm,

                Comment


                • #9
                  Re: Business complications with Muslim brother

                  Thought I'd try one more time. Anyone have advice?

                  Comment


                  • #10
                    Re: Business complications with Muslim brother

                    Bump

                    Comment


                    • #11
                      Re: Business complications with Muslim brother

                      Originally posted by newmuslimguy View Post
                      Anyone have any input?
                      He's taking the mic, give him his 2.5k back and tell him the deal is off, he's an investor, it's not his business, he's had his minimal cut already and can't really complain if he's not fulfilling his end of the bargin.
                      FOLLOW THE NEW BLOG - GINGERBEARDMAN - Muslim, father, husband, writer, defender of ginger rights!

                      www.facebook.com/outreach4Islam - Outreach4Islam have been working together in Leicester, calling the not yet Muslims to Islam since 2006.

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                      • #12
                        Re: Business complications with Muslim brother

                        Originally posted by Gingerbeardman View Post
                        He's taking the mic, give him his 2.5k back and tell him the deal is off, he's an investor, it's not his business, he's had his minimal cut already and can't really complain if he's not fulfilling his end of the bargin.
                        I'm not asking for advice. I'm asking what my options are so I can decide. What if I don't want to cut him out?

                        Comment


                        • #13
                          Re: Business complications with Muslim brother

                          Originally posted by newmuslimguy View Post
                          I'm not asking for advice. I'm asking what my options are so I can decide. What if I don't want to cut him out?
                          That's your choice, but he appears to be wanting a share, but with no work and only a little investment. If you want to continue you as a matter of charity, that is your choice.
                          FOLLOW THE NEW BLOG - GINGERBEARDMAN - Muslim, father, husband, writer, defender of ginger rights!

                          www.facebook.com/outreach4Islam - Outreach4Islam have been working together in Leicester, calling the not yet Muslims to Islam since 2006.

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                          • #14
                            Re: Business complications with Muslim brother

                            Originally posted by Gingerbeardman View Post
                            That's your choice, but he appears to be wanting a share, but with no work and only a little investment. If you want to continue you as a matter of charity, that is your choice.
                            Why do I owe him money?

                            Comment


                            • #15
                              Re: Business complications with Muslim brother

                              Originally posted by newmuslimguy View Post
                              Buying him out means giving him his money back or more. My issue with that is then there is not penalty for him breaking the contract. It was a no risk investment to him and caused me a lot of time and stress I would not have had otherwise.

                              I could minimize his percentage, but that would really bother him because at that point he would get so little it would not really be worth his original investment. He was already not happy to get 8% because that's really only worth the investment longer term, which our agreement is not.

                              Either one of us getting upset aside, if we were not friends, what would be the most fair thing to do. I play on being more than fair to him in the end, but I'd like to know what everyone is entitled to
                              I dnt know much about islamic finance so I cant help you there.

                              I see two options for you.

                              1. Your friend is an external investor. So you could pay him his investment amount back and cancel all arrangements.

                              2. You could wait till the end of the first year and give him a return on his investment + 8% of any profits. That way he has made something as well and you aren't killing the friendship.

                              He has already gone from 16% to 8% so he has already paid a penalty for not holding his side of the deal, if you know what I mean.

                              Also remember in Islam there is also the concept of profit and loss sharing. If the business has made a loss in the first year, he needs to share that with you at 8%. But best speak to an expert first for clarification on this.

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