6. THE RULES ABOUT BENEFIT VERSUS LIABILITY:

The relationship between the right to enjoy benefit from a property and the liability to incur loss due to proprietorship is governed by a number of rules that carry great significance in transactions of commercial nature. In cases where commercial nature is not involved the plain rule is that * “What is permissible in law cannot be a cause for liability”.

Thus if a person digs a well in his farm and somebody's animal falls in it and is drowned the owner of the well will not be liable to compensate for the loss because he is allowed to get a well dug at his farm.

Similarly it is presumed an Islamic government provides the best available transport facility to its citizens, to construct dams for irrigation and electricity, to devalue or revalue its currency in the national interest, and to carry on development projects for the benefit of its people. Now in case somebody is run over by a train due to his own fault or is killed in an air-crash, or is carried away alongwith his property by floods caused by breaches in the dam, the government will not be legally liable to compensate for the loss.

If a government expenditure on development creats inflationary pressures the government would not be bound to compensate the buyers for a fall in value of their money caused by this action.

Another rule dealing with non-commercial transactions is governed by the Prophet's (peace be upon him) saying that:

“There is no indemnity on usufructuary who does not breach (the terms) nor on depositary who does not breach (the terms)”.

Liability to indemnify the aggrieved party arises in a large number of non-commercial transactions like usurpation, slander, crime, found property, agency, marriage, sustenance, etc., under conditions of infringement of one's rights an~ negligence of duties and responsibilities. In cases, however, where commercial considerations are involved the rule provides that * “Damage and benefit go together. That is to say that a person who obtains the benefit of a thing, takes upon himself also the loss from it”.

This general rule is based on the Prophet’s (peace be upon him) saying:

“Al-kharaj bi’d-daman" (“Revenue goes with liability”).**

Another legal maxim that also has the same bearing is:

* “The blessings of a thing are in proportion to the evils thereof and vice versa”.

Thus when the thing used is destroyed while in the possession of the user compensation for use will be included in relation to its value; for example, if the buyer of an animal returns it because of a defect, after using it for a period, he is not liable to pay for the use of the animal, since if it had died before being returned, it would have died as his property. These rules imply that if the merchandise not yet possessed by the buyer is lost, it is the seller but not the buyer who would have to bear the loss because the former enjoys possession.

Or, in case the price of purchased goods still in possession of the seller increases, the increase will benefit the one who is deemed to be liable to suffer from an adverse fluctuation in price of the goods.

Contrarily, in a contract of Shirka a condition under which one party is entitled to a share in profit only while the other party is made liable to the entire loss alongwith his share in profit would contradict the above rule.**

Similarly renting out one's house on the condition that the tenant would be liable to the value of the house if the same is damaged due to flood or earthquake is also a contravention of the rule because the owner who is earning its rent should also bear the loss.

The depositary who is liable to return the deposit is entitled to take away the profit of the deposit if the same has been invested, even though the permission (express or implicit) has been given by the depositor.

But if the depositor lays down the condition of transfering profits to him he will have to bear the loss, when incurred, on these investments.

The depositor is liable to bear the expenditure of safe-keeping because it is he who benefits from this safety.

These rules are to be made applicable to all situations where an owner earns benefit from the property which he has transferred or intends to transfer fully or partially to others under a contract of sale, hire, lease, tenancy, agency, etc; or joins with another person with a view to earning through partnership (Shirka or Mudaraba) or sharecropping (Muzaraa). The rule guides us to decide whether all the partners in a partnership business will be similarly entitled to a return and liable to losses or a discrimination may be made 'between different partners on the basis of the time or amount of their deposits in assigning their shares in profit and loss? Can some share-holders be issued debentures or preference shares ensuring a fixed return while some others only ordinary shares whose owners are liable to bear the entire loss? Can an underwriter be treated differently in sharing the profit and loss in business? Which of the parties to a contract of leasing or hire purchase will be responsible for bearing the expenses of maintenance, repair and insurance? Can any set of terms and conditions of rent, hire or lease between a lessor and lessee be validly settled? To what extent a guarantee may be claimed from a partner, and against which kind of losses? The answers to these and similar questions should be judged on the basis of the criteria provided by the above mentioned rules.