CHAPTER ON SETTLEMENT
370—The Prophet, peace and blessings be upon him, said: “Settlement is permissible among Muslims, except a settlement that prohibits what is lawful or permits what is unlawful.” 1. Reported by Abū Dāwūd and al-Tirmidhī.
Al-Tirmidhī graded it good and authentic, and al-Hākim declared it authentic 2, 3.
371—If he reaches a settlement with him concerning a specific item of property in exchange for another specific item or a debt, it is permissible.
372—If someone owes him a debt and he settles it in exchange for a specific item, or for another debt that he takes possession of before they part, it is permissible.
373—The settlement is also valid if he reaches an agreement with him for a specified right of use in his real estate or other property; if he settles a deferred debt by accepting part of it immediately; or if someone owes him a debt whose amount neither of them knows and he settles it for something 4.