then he has no right to retract the transfer when collection becomes impossible or unduly difficult, for he consented to moving his claim from one liability to another whose outcome he knew, much like one who knowingly buys a defective piece of merchandise.
If, however, he did not agree to be referred to an insolvent person and the like, or he did agree but was unaware of that person’s insolvency, or was deceived about it, or he expressly stipulated the right to revert should collection prove impossible or arduous, then the correct view is that he may indeed revert. The insolvency of the transferee is a defect of which he had no knowledge and to which he never consented, so he may rescind the transfer; likewise, he may revert on the basis of his explicit stipulation, for “the Muslims are bound by their conditions.” Allah knows best.
Chapter: One who finds his merchandise with a man who has gone bankrupt
First ḥadith
Abū Hurayrah (may Allah be pleased with him) reported that the Messenger of Allah ﷺ said [or he said: I heard the Messenger of Allah ﷺ say]: “Whoever locates his property in its very form with a man—or with a person—who has become bankrupt has a stronger right to it than anyone else.”
Overall meaning
If someone sells his goods to another, or deposits them with him, or lends them to him and the like, and that purchaser or recipient then goes bankrupt so that his assets do not cover his debts, the original owner may reclaim his goods provided he finds them unchanged in a way that would remove them from their original designation, that he has not received any of the price, and that no one else has acquired a right in them through purchase, gift (1), pledge, pre-emption, or any other compensatory contract. In that case he has priority over the creditors who are competing for the estate, because he has recovered his property itself and no one can dispute him over it.
If, however, the item has been altered so that it no longer carries its original name and description, or the seller has already received all or part of the price, or the bankrupt has disposed of it in a way that has vested a right in someone else, then its owner stands on equal footing with the other creditors.
Points derived from the ḥadith:
- Whoever finds his goods with a bankrupt person may take them back, subject to conditions the scholars have deduced from the aḥādīth and from their understanding of the Legislator’s intent. Ibn Daqīq al-ʿĪd said: its evidential force is strong.