When Does Charging a Penalty Become Haram?

When it comes to non-lending activities, Islam is (generally) interested in ensuring that these activities can be made into viable businesses and therefore the burden of proving the absence of hardship when charging a late penalty is dropped. A lessor may charge a lessee a penalty if their payments are late just as a utility company may charge a customer for a late electric bill.

Human Capital Mudarabah in the Quran

I’ve been advocating for the adoption of HCM agreements in the Muslim community and while the default ruling on anything in Islam is permissibility, it helps to have explicit support for an idea in the Quran or Sunnah (the life and sayings of the prophet Muhammad peace be upon him). I believe there is such support for Human Capital Mudarabah in the Quran.

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