A partner stipulating that the other partner not compete

A question about a partner stipulating that the other partner may not set up a competing business during or after the partnership, in which Jordan's General Iftaa Department answered that the condition is valid and binding during the partnership but void and without effect after it ends, while a former partner still may not harm the company or take its clients. ¹

The questioner asked about the ruling on one partner stipulating that the other may not compete by setting up a business similar to the company's, during the partnership or after the partnership contract ends. ¹

The Department answered that among the established rules is that the contract is the law of the contracting parties, and that a partner stipulating a recognised condition serving a real purpose, such as not setting up a similar business during the partnership, is a valid condition that must be kept, citing a hadith reported by al-Tirmidhi that Muslims are bound by their conditions except a condition that forbids the permitted or permits the forbidden. ¹ It said this condition is valid because it secures a benefit for one party and protects him from harm. ¹ It held a condition barring competition after the partnership contract has been dissolved to be void and without effect, because it restricts the partner's right without just cause, citing the agreed-upon hadith that any condition not in the Book of God is void. ¹ It noted that after the partnership ends a partner still may not harm his former company or take its clients, relying on the hadith reported by Ahmad that there is to be no harm and no reciprocal harm. ¹

Jordan's General Iftaa Department published this fatwa on aliftaa.jo as no. 3982, dated 3 July 2025. ¹ The museum records this text as a historical document attributed to the body or scholar that issued it; it issues no ruling of its own.