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Chapter twenty-two » Security (Rahn)(1) → ← Chapter twenty » Loan (Qarḍ)

Chapter twenty-one » Transfer of Debt (Ḥawālah)

Ruling 2308. If a person refers his creditor to someone to get the money he is owed and the creditor accepts to do this, then, if the transfer agreement is concluded in accordance with the conditions that will be mentioned later, the person to whom the debt is transferred becomes indebted to the creditor. Thereafter, the creditor cannot claim what he is owed from the first debtor.

Ruling 2309. The debtor, creditor, and the transferee must be of the age of legal responsibility (bāligh), sane (ʿāqil), and no one must have compelled them [to enter into the transfer of debt agreement]. Furthermore, they must not be foolish with finances (safīh); i.e. they must not spend their wealth in futile ways. It is also a requirement that the debtor and the creditor must not have been proclaimed bankrupt (mufallas) except if the transfer is to a person who is not indebted to the transferor, in which case if the transferor has been proclaimed bankrupt, there is no problem.

Ruling 2310. In all cases of transfer of debt, [in order for the transfer to be valid (ṣaḥīḥ),] the transferee must be willing to accept the transfer, whether he is indebted or not.

Ruling 2311. When a person makes the transfer, he must be indebted. Therefore, if he wishes to obtain a loan (qarḍ) from someone, then until he does not obtain the loan from him, he cannot refer him to someone else to get the sum that he later wishes to borrow from him.

Ruling 2312. The type and amount of the debt being transferred must in fact be specified. Therefore, if a person owes a quantity of wheat (say, 10 kilograms) and an amount of money (say, £10), and he says to the creditor, ‘Get one of the two things you are owed from so-and-so’ without specifying which item, the transfer is not correct.

Ruling 2313. If the debt is actually specified but at the time of making the transfer the debtor and the creditor do not know the amount or type of it, the transfer is valid. For example, if someone’s debt is recorded in a document and he makes the transfer before referring to the document and thereafter he refers to it and informs the creditor of the amount of the debt, the transfer is valid.

Ruling 2314. A creditor reserves the right to refuse a transfer of debt, even if the [proposed] transferee is wealthy and would not be negligent in paying the debt.

Ruling 2315. If a person who is not indebted to the transferor accepts the transfer of debt to himself, he can claim the amount of the debt from him before paying it. This is unless the debt that has been transferred to him has a time period and the period has not yet come to an end. In such a case, he cannot claim the amount of the debt from the transferor before the period comes to an end, even if he has already paid it. And if the creditor settles what he is owed for a lower amount with the transferee, the latter can only claim that amount from the transferor.

Ruling 2316. Once a transfer of debt has taken place, the transferor and the transferee cannot annul the transfer. And if the transferee is not poor (faqīr) at the time of the transfer, even though he may have become so afterwards, the creditor cannot annul the transfer. The same applies if he is poor at the time of the transfer and the creditor is aware that he is poor. However, if the creditor does not know he is poor and realises this afterwards, then, if at that time he is not financially stable, the creditor can annul the transfer and claim what he is owed from the transferor. But if he is financially stable, then for him to have the right to rescind (faskh) is problematic (maḥall al-ishkāl) [i.e. based on obligatory precaution (al-iḥtiyāṭ al-wājib), he does not have the right to rescind the transfer].(1)

Ruling 2317. If a debtor, creditor, and transferee, or one of them, reserves the right to annul the transfer of debt, he/they can annul the transfer in accordance with their agreement.

Ruling 2318. If a transferor himself pays his debt to the creditor, then, if the transferee was indebted to the transferor and he had requested the transferor to pay the creditor, the transferor can claim what he paid to the creditor from the transferee. But, if the transferor paid the creditor without the transferee requesting this, or if the transferee was not indebted to the transferor, then the transferor cannot claim what he paid the creditor from the transferee.

(1) As mentioned in Ruling 6, the term ‘problematic’ (maḥall al-ishkāl) amounts to saying that the ruling is based on obligatory precaution.
Chapter twenty-two » Security (Rahn)(1) → ← Chapter twenty » Loan (Qarḍ)
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