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CHAPTER TWENTY-ONE » Transfer of Debt (Ḥawālah) → ← CHAPTER NINETEEN » Agency (Wikālah)


Giving a loan to believers, especially the needy among them, is one of the recommended (mustaḥabb) acts that has been highly advised in traditions. For example, it has been reported that the Most Noble Messenger (Ṣ) said, ‘Whoever gives a loan to his brother in faith and gives him respite until he is financially able to repay it, his wealth will increase and angels will send mercy upon him until the time he takes his money back.’ And it is reported that Imam al-Ṣādiq (ʿA) said, ‘Every believer who gives another believer a loan with the intention of attaining proximity to Allah, Allah will record for him the reward of giving alms to the poor (ṣadaqah) until he takes his property back.’

Ruling 2291. It is not necessary to say a particular formula (ṣīghah) when giving a loan; rather, if one gives something to someone with the intention (niyyah) of giving a loan and the latter takes it with the same intention, it is valid (ṣaḥīḥ).

Ruling 2292. Whenever a borrower repays his loan, the lender must accept it. However, if a period for repaying it at the request of the lender or both parties was agreed upon, then the lender can refuse to receive what he is owed before the period expires.

Ruling 2293. If a period for repaying the loan is agreed upon in the loan agreement, in the event that specifying the period was done at the request of the borrower or both parties, the lender cannot claim what he is owed before the period expires. However, if specifying the period was done at the request of the lender or no period was specified at all, the lender can claim what he is owed whenever he wishes.

Ruling 2294. If a lender claims what he is owed and there is no time [period specified in the loan agreement] or the time for repayment is due, in the event that the borrower can repay his loan, he must do so immediately. If he delays in doing so, he will have sinned.

Ruling 2295. If a borrower owns nothing besides a house that he resides in and some household furniture and some other things which, taking into consideration his status and social position, he needs and without which he would fall into difficulty, the lender cannot claim what he is owed from him. Instead, he must wait until the borrower can repay his loan.

Ruling 2296. If a borrower cannot repay his loan but it is easy for him to trade, or if his job is trading, then it is obligatory (wājib) on him to earn and repay his loan. In fact, if none of the above apply to him but he can earn by doing something worthy of his status, the obligatory precaution (al‑iḥtiyāṭ al‑wājib) is that he must earn and repay his loan.

Ruling 2297. If a person has no access to his lender and has no hope of finding him or his heirs in the future, he must give what he owes to a poor person (faqīr) on behalf of the lender. The obligatory precaution here is that he must obtain authorisation from a fully qualified jurist (al‑ḥākim al‑sharʿī). However, if he has hope of finding his lender or his heirs, he must wait and search for him/them. In the event that he does not find him/them, he must make a will (waṣiyyah) to the effect that if he dies and his lender or his heirs are found, he/they must be paid from his estate what he/they are owed.

Ruling 2298. If the estate of a deceased person is not greater than the costs of his obligatory shroud (kafan), burial (dafn), and debts, his estate must be spent on these items and his heirs do not inherit anything.

Ruling 2299. If a person borrows an amount of money, wheat, barley, or something else that is fungible and its value depreciates or appreciates, he must return the same amount of those items with the same qualities and particulars that affect the desirability of those items. There is no problem if the borrower and the lender are content with receiving something else instead. However, if he borrows something that is non-fungible, such as sheep, he must give back an amount that is equivalent to the item’s value on the day he took it on loan.

Ruling 2300. If the property that someone has borrowed is not destroyed and the owner claims it, it is not obligatory for the borrower to return the same property to him. Likewise, if the borrower wishes to return it, the lender can refuse to accept it.

Ruling 2301. If the lender stipulates a condition that he will take back more than he gives – for example, he gives 10 kilograms of wheat and stipulates that he will take back 11 kilograms, or he gives ten eggs and stipulates that he will take back eleven eggs – this is usury (ribā) and unlawful (ḥarām). In fact, if it is agreed that the lender will perform a task for him or will return the loan along with some other commodity – for example, he stipulates that the £10 he has given on loan must be returned along with one matchstick – this is also usury and unlawful. Furthermore, if he stipulates a condition that the item being taken on loan must be returned in a particular manner – for example, he gives an amount of gold that has not been crafted and stipulates that gold that has been crafted [such as a piece of jewellery] must be returned – again, this is usury and unlawful. However, if the borrower himself returns the loaned item with an extra amount without such a thing being stipulated, there is no problem; in fact, it is recommended.

Ruling 2302. Giving interest (ribā), just like taking interest, is unlawful, but the loan itself is valid. Someone who takes a usurious loan becomes the owner of it but the lender does not become the owner of the extra that he takes, and any use he makes of it is unlawful. Furthermore, if the lender purchases something with the same item [i.e. the extra item he received in the usurious loan], he does not become the owner of it. In the event that had he not made an agreement of usury, the borrower would have consented for the lender to use the money, then his use of it is permitted (jāʾiz). Similarly, if due to not knowing the ruling (masʾalah) the lender takes interest and after finding out the ruling he repents, then what he took when he did not know the ruling is lawful (ḥalāl) for him.

Ruling 2303. If a person acquires wheat or something similar through a usurious loan and cultivates it, he becomes the owner of the resulting produce.

Ruling 2304. If a person purchases some clothing and afterwards pays for it with money acquired through usury or with lawful money mixed with such money, he becomes the owner of it and there is no problem in him wearing it and performing prayers in it. However, if he says to the seller, ‘I am purchasing this clothing with this money’, then he does not become the owner of it and wearing it is unlawful.

Ruling 2305. If a person gives an amount of money to someone so that someone else in another city takes a lesser amount on his behalf, there is no problem. This is called ‘ṣarf al‑barāt’ [a type of bill of exchange].

Ruling 2306.* If a person gives something to someone so that he may take a greater amount in another city, and if the item is gold, silver, wheat, or barley which can be weighed or measured, it is usury and unlawful. However, if the party taking the extra amount gives or does something in return, there is no problem. If banknotes are given on loan, it is not permitted to take back more even though the amount of debt has decreased due to high prices. However, if the value of the loan goes down too much due to inflation and the like, it is an obligatory precaution to reach a settlement (ṣulḥ). If banknotes are sold for banknotes, and the sale is an immediate exchange (naqd)[1] or credit (nasīʾah) transaction but the money is in two currencies, such as pounds sterling and dollars, then there is no problem with any extra received. However, if it is a credit sale and the money is in one currency only, then receiving an extra amount is problematic (maḥall al‑ishkāl) [i.e. based on obligatory precaution, one must not receive an extra amount].[2]

Ruling 2307. If a person is owed by someone a commodity that is neither weighed nor measured, he can sell it to the borrower or someone else for a lower price and take the sum immediately. Therefore, in present times, a lender can take a cheque or promissory note from the borrower and sell it to a bank or another person for less than what he is owed – which is commonly known as ‘cheque cashing’ – and he can take the sum immediately.

[1] In an immediate exchange transaction, there is no lapse of time between the buyer paying for the item and receiving it.

[2] As mentioned in Ruling 6, the term ‘problematic’ (maḥall al‑ishkāl) amounts to saying the ruling is based on obligatory precaution.
CHAPTER TWENTY-ONE » Transfer of Debt (Ḥawālah) → ← CHAPTER NINETEEN » Agency (Wikālah)
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