12. TRANSFERRING THE RIGHT TO COLLECT A DEBT
TRANSFERRING THE RIGHT TO COLLECT A DEBT (HAWALA)
(In Sacred Law, a transfer is an agreement that moves a debt from one person’s responsibility to another’s.)
Given three persons, X (al-muhtal), Y (al-muhil), and Z (al-muhal ‘alayhi) (A: where X loans Y a dirham, and Z already owes Y a dirham, so Y transfers the right to collect the old debt(that Z owes him) to X, instead of repaying X for the new debt. Such transfers have six integrals:
a) Y;
b) X;
c) Z;
d) Y’s debt to X;
e) Z’s debt to Y;
f) Y’s spoken offer and X’s spoken acceptance).
It is a necessary condition for the validity of transferring a debt that Y wishes to do so, and that X accepts. It is not necessary that Z wishes it.
(The agreement also requires a form, which is the spoken offer and acceptance, meaning Y’s offer and X’s acceptance.)
Such a transfer is not valid unless Z owes Y a debt and Y owes X a debt. A transfer is valid respecting a legally binding debt (owed to X) for another legally binding debt (Z owes to Y), provided:
(a) that X and Y know what is being transferred (gold, silver, or wheat, for example) for what;
(b) that X and Y know that the two debts are homogeneous in type (such as money for money, or wheat for wheat) and in amount (though if Y owes X five, and Z owes Y ten, and Y transfers (the right to collect) five of it to X, then this is valid);
(c) and that X and Y know whether the debts are currently due or payable in the future (the two debts may differ in this respect if both parties agree).
The validity of a transfer is not affected by the existence of collateral or of a guarantor as security for one of the debts, but the occurrence of the transfer eliminates (either form of) security, the guarantor being relieved of any responsibility and the collateral no longer being collateral)
Through a valid transfer, Y no longer owes X a debt, Z no longer owes Y a debt, and the debt owed to X becomes the responsibility of Z. If X is unable to collect the debt from Z because Z is bankrupt or denies the existence of the debt or for some other reason (such as Z’s death), then X is not entitled to go back to Y (to collect it) (but rather it is as though X has accepted for the debt a remuneration which was subsequently destroyed in his possession).
(Source: The reliance of the traveller, revised edition, Edited and Translated by Nuh Ha Mim Keller)
Comments
John Doe
23/3/2019Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.
John Doe
23/3/2019Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.
John Doe
23/3/2019Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.