16 – The Book of Transfer (ḥawālah)

A ḥawālah—assignment of a debt—is permissible in respect to liabilities. It takes effect only with the consent of the assignor (al-muḥīl), the creditor in whose favour the transfer is made (al-muḥtāl lahu), and the person upon whom the debt is shifted (al-muḥāl ʿalayhi). Once the transfer is concluded, the assignor is discharged from the debt, and the creditor may not revert against him unless his right is frustrated. According to Abū Ḥanīfah, frustration (iltawāʾ) occurs in either of two cases: (1) the transferee denies the ḥawālah, supports his denial with an oath, and no evidence is produced against him; or (2) he dies insolvent. Abū Yūsuf and Muḥammad add a third situation: that, while still alive, a judge declares him bankrupt.

If the transferee later demands from the assignor a sum equal to the amount of the ḥawālah, and the assignor replies, “I only referred the creditor to you because you already owed me that amount,” his claim is not accepted and he must pay the sum demanded.

Likewise, if the assignor demands from the creditor what he had transferred to him, saying, “I assigned you only so that you might collect it on my behalf,” while the creditor responds, “No, you assigned it to me as a debt that is mine,”