The first condition is that the transferor’s debt be immediately due; for if it is not, the arrangement would amount to exchanging one deferred debt for another.

The second is that the debt by which he effects the assignment be identical, in both amount and description, to the debt for which he assigns it. Should they differ in either respect, the transaction becomes a sale, not an assignment; it thus moves from the sphere of dispensation to that of sale, and once it is treated as a sale the prohibition of “a debt for a debt” comes into play.

The third condition is that the debt not consist of food owed under a salam contract—whether this applies to both debts or to only one of them—and, according to Ibn al-Qāsim, that the debt to which the creditor is referred has not yet fallen due. If both debts are salam food-stuffs, the assignment of one for the other is invalid whether their terms have matured or not, or one has matured while the other has not, for this would involve selling food before taking possession, as previously explained.

Ashhab, however, maintains that if the principal sums are equal the assignment is permissible and is treated as tawliyah, a transfer at cost. Ibn al-Qāsim disagrees, treating this case no differently from one in which the sums differ. In every instance the assignee stands, with respect to the debt to which he has been referred, in the assignor’s place, and likewise occupies his position with respect to the debt by which the assignment was made. The same applies to any substitute he may wish to take for it or any sale he may wish to conclude with a third party—that is, he may do no more than the assignor could have done with him, and no more than the assignor himself could have done with the person upon whom he made the assignment.

For example, if a creditor is referred for payment of a food loan in exchange for food owed under a salam contract, or for food owed under salam in exchange for a food loan, he may not sell that food to a third party before taking possession of it. When the assignment involves food obtained by loan for food owed under salam, the creditor assumes the position of the assignor and therefore may not sell what his debtor owes him before receiving it, because it is food acquired by sale. Conversely, when the assignment involves food owed under salam for food obtained by loan, the creditor stands vis-à-vis the transferee in the same position the assignor occupied toward him: just as the assignor could not sell the food owed him by his debtor before taking delivery, so too the creditor may not sell the food assigned to him, even though it is a loan. All of this represents the Mālikī school, though the proofs for such distinctions are weak.

As for its legal consequences, the majority of scholars hold that ḥawālah is the opposite of ḥamālah (suretyship): if the transferee becomes insolvent, the creditor has no recourse against the transferor. Mālik and his colleagues except only the case in which the transferor deceived the creditor by referring him to an insolvent person.

Abū Ḥanīfah, however, rules that the creditor may revert to the transferor if the transferee dies insolvent, or denies the assignment and the creditor lacks proof; this view was also held by Shurayḥ, ʿUthmān al-Battī, and others.

The basis of their disagreement is the resemblance of assignment (ḥawālah) to suretyship (ḥamālah).