Riba In Secured Loans For Consumables
“Injustice is when there is a breach of mutual contract”? That is an extremely narrow definition of injustice. People in dire need will take loan and sign any contract. They will even write their life off; that doesn’t make it ok. Let’s not involve court and justice system. There is only one court and justice; that is Allah’s court and justice. Human court and justice are biased and extremely flawed. Rich people influence to make laws and tax system in their favor. Justice system favors rich. Let’s not involve human laws. Simple definition of Zulum is “any action of one human that puts another human in psychological or physical pain” Wadood, I think you are mixing the concept to taking undue advantage of people and necessaties of life with the rest.
Fixed profit agreed on a free and fair agreement can become Riba, if the value created by the venture falls short of the agreed payment without any determinable fault of the borrower. Many times ventures are flopped due to “Act of God” that’s when things beyond human control go wrong. That’s why there is a standard clause called “Force Majeure” in all modern days agreements that releases the affected party of performance obligation if unforeseeable circumstances prevent him from fulfilling a contract. In such an event claims are limited to shareholders investment in the business (in an LLC) – i.e., no one can ask owners to sell their houses or private properties to pay off business debts caused by losses, unless a fraud is proven in the court of law.
My opinion is different. The word fixed and profits are oxymoron. To me it is giving a new name to interest to justify its use. Unless the investor is willing to take part of losses if business goes under, it is interest. To be certain, I rather buy and lease a specific item, land, building, machinery, etc., to business, if I am seeking a fixed payment and return of full investment with profit. I do not see a need to invest cash in a business to seek a fixed monthly income. The other method will be to buy business stocks with quarterly dividends for a regular income.