In the name of Allah. May Allah bless and grant peace to our master Muhammad and his family.

Book of Settlement

Reconciliation (ṣulḥ) is permissible among Muslims, except for an agreement that makes the unlawful lawful or the lawful unlawful. According to Mālik, the two litigants may settle whether the claim has been admitted or denied, provided that each does so willingly and without coercion. Settlement is treated like sale: whatever is valid in a sale is valid in a settlement, and whatever is invalid in a sale is invalid in a settlement.

If two partners possess dinars, dirhams, fulūs (copper coins), and ʿurūḍ (merchandise), and they agree that one of them will take a sum of dinars from the other in lieu of his share in all of that, the settlement is not valid unless the only dinars in their hands are those very coins, the dirhams amount to less than the exchange value of a single dinar, and there is no debt outstanding between them; otherwise it is invalid.

It is unobjectionable for a man to settle a debt of gold owed to him with silver taken from the debtor, or a debt of silver with gold, so long as the debt is due and he receives the substitute immediately before the two parties part company.