ISB 654 Advance Fiqh Muamalat

Prepared for: Ustaz Asyadi Bin Redzuan Prepared by: Mohamad Nizam Bin Bahrom Muhammad Syahir Azri bin Mohd Yusof

Literally:

shift, change and transfer.

Technically:

Transfer the right to demand the debt from the debtor to another person liable.

Nature:

A has a debt owing to him from B and A himself owes a debt to C. All three agree that C, instead of realizing his due from A, and A his due from B, C shall realize his duties from B.

Sunnah By the Hadith in which the Prophet (pbuh) is reported by Al-Bayhaqi to have said: Delinquency of rich debtors is a form of transgression, so if one of you has his debt transferred to a rich person, let him accept the transfer of debt. The majority of jurists infer from this hadith that it is preferred to accept the transfer of debt, but that it is not an obligation. On the other hand, Dawud and Ahmad ruled that the text of the hadith includes an order which makes it obligatory to accept the transfer of debt (where the transferee is rich)

Ijma There is also proof for the legality of transfers of debt provided by the consensus of jurists on its permissibility. In this regard, jurists have permitted transfers of debt for the transfer of fungible debts. However, it is not permissible for nonfungibles since the transfer of liability may only be effected for fungibles.

1. Muhal (creditor, transferred party), 2. Muhil (transferor, debtor), 3. Muhal `alayhi (transferee), 4. Al Muhal Bih (the transferred debt), 5. The debt owned by the transferee to the principal debtor, 6. Contract Expression (offer by a debtor and acceptance by the transferee and the creditor).

Muhal (The Creditor)

Muhil (The transferor)

Muhal Alaihi (The transferee)

Muhal (The Creditor)

Muhil (The transferor)

Muhal Alaihi (The transferee)

1.

Hawalah Muqayyadah (restricted)

It is the transfer of debt from the transferor to the transferee who is also indebted to him. Endorsed by Majority and view that the transfer can only be made between the creditors and debtors.

2.

Hawalah Mutlaqah (unrestricted)

It is the transfer of a debt to the transferee who owes

no debt to the transferor (only Hanafi). Majority view this as a contract of agency.

All contracting parties must be legally competent to act independently All relevant parties shall give their consent on the hawalah agreement. The transferor must be a debtor to the transferee. As for restricted hawalah, the payer must be the debtor to the transferor. Both the transferred debt and debt to be used for settlement must be known and transferable.

1.

The relationship between the parties involved where it discharges the transferor from the debt and the claims in respect of it. If the transfer was made on the condition that the payer must be solvent, then the creditor will reserve the right to recourse if the payer proves to be insolvent. Shafie & Hanbali Once transfer, cannot return back to Muhil Maliki Muhal has the right to recourse to Muhil (transferor) because there may have misrepresentation Hanafi If transferee dies or bankrupt or impossible to get back or he denies indebtedness or when he declared bankruptcy in his life time, than can recourse.

2.

The transferee is entitled to have right of recourse against transferor in following situations:

Death of a payer in bankruptcy Payer denies concluding the hawalah contract and has taken a judicial oath to this effect and there is no evidence to prove otherwise. The payer is declare bankrupt by court order

3.

The transferee is entitled to claim the amount of the debt assigned to him through hawalah from the payer In restricted hawalah, the transferor is no longer entitled to reclaim from the payer an amount transferred to the payer.

4.

1. Hawalah is void. 2. Debt is duly paid. 3. Death of payer and transferee inherits from them. 4. Debt is released from the obligations transferee (waive, gift or charity). 5. Aqad hiwalah was revoked right shifting back to the original creditor debt. 6. Any death or bankruptcy or denial of the contract that makes its implementation impossible

1.

Issuance of a cheque against a current account:

Issuer = Transferor Bank = Transferee Beneficiary = Creditor.

2.

Overdraft:

Issuer = Transferor (no balance) Beneficiary = Creditor (get cheque) Bank =Transferee.

3.

Transfer of money (remittance).