Section Eight
Transfer
Al-hawālah
In the terminology, a hawālah is: an agreement in which the debtor transfers the debt he owes to another person and asks the creditor to turn to him. When it is established, the debtor becomes the ‘transferor’ (mohil), the creditor the ‘(person whose debt has been) transferred’ (mohal) and the third person is the middleman or the '(person to whom the debt has been) transferred’ (mohāl ‘alayh).
hawālah has another new meaning, which is: the request by the transferor (debtor) to the person whose debt has been transferred (creditor) to pay the asset to the transferred (creditor) without the middleman owing anything to the transferred (creditor).We shall explain the transfer (hawālah) in both of its meanings as follows:
1196. The transfer is established as in the first meaning through a contract that includes a proposal from the debtor and acceptance from the creditor using any words or acts that secure the meaning.
1197. It is not conditional in a transfer contract that the middleman issues an acceptance in addition to the acceptance of the creditor, except in the following cases:
a- If the middleman does not owe anything, i.e. does not owe the debtor anything; such a transfer is called a ‘transfer to a non-owing person’.
b- If the debt used for the transfer to the debtor is of another type of the debt that he (the middleman) owes the creditor.
c- If the debt owed by the middleman is postponed while the debt being transferred is immediate, or postponed to a date that arrives earlier than the first one.
1198. All general conditions required in other contracts are to be met by the debtor, the creditor and the middleman, including the condition of not being indicted for bankruptcy in any situation in which the transfer will violate the rights of the (indictment) creditors. Also, in a transfer, the debt must be confirmed as owed by the transferor (debtor) for any reason of debts, and that the asset used for the transfer is specified, not obscure, nor unspecific and spread across two or more commodities or assets.
1199. It has become common in our time to use a type of transfer which is a sort of financial service that the middleman carries out – for a charge or free of charge – for the debtor without the transfer between them putting the middleman in the position of owing the creditor for asset owed by the debtor; it takes several forms:
First type: Bank transfer, which is making the bank a medium for the transfer, something which takes place in two ways:
First, the bank transfers funds to its client by issuing a cheque to its client at one of its branches – inside the country or abroad – so as to enable him take a certain amount of money – so the bank is a debtor, the client is a creditor and the branch is a middleman. The ruling for this follows two situations:
1- If the client who wants the transfer has an account in the bank, in this case the ruling is that the bank is allowed to take a commission for making this transfer.
2- If the client who wants the transfer has no account at the bank, in this case the bank is not allowed to take a commission for making the transfer to another branch, and taking it is a forbidden interest as a principle. That said, the bank can validate taking this commission by authorising the client to take the money from the branch as a loan, and since authorising the client will make things easier for him, the bank will, then, be allowed to request a commission from him for the authorisation not the lending; this is despite the fact that the client’s authorisation is not necessary as the branch is an authorised agent of the bank’s main branch (the debtor) and is capable itself of carrying out the lending to the creditor. However, if the middleman is another bank in which the lending bank has deposited its monies, not one of its branches, in this case the client's authorisation will be necessary.
Second, the debtor transfers money to his creditor through the bank by means of a cheque or the like, in which he asks the bank to transfer an amount of money to his creditor in another country, such as a merchant from whom he imported some goods. In this case, the bank is allowed to charge commission if the transfer was done upon a request from the debtor client, which is instead of the bank paying his debt abroad if the client had money in the bank; it is also allowed if he had no money in the bank, so the transfer will become a transfer to a non-owing party (which is the bank), when it is allowed for it to take an exchange for accepting the transfer to it and for paying off his debt abroad. However, if the client has money in the bank and he transfers money to his creditor through it to get him paid in the bank’s own country – i.e. without any transfer abroad – in this case the bank transferred to has no right to charge anything for paying his debt.
Second type: The creditor transfers his debtor with his debt to his agent/proxy, or to a treasurer, or to someone who has something kept as a trust for the creditor – who is called ‘wade’i’ (derived from wedi’ah = deposit)), or to a non-owing party – this type is allowed even if the creditor does not accept it, unless this will violate his right to be paid in type, time and place; the middleman, however, must accept it even if it means being bound by it due to a condition, vow or the like.
Third type: The transfer of someone whom he is going to owe, such as the transfer of the price of goods he intends to buy, a dowry of a woman he intends to marry, or similar things that do not fall in the category of the terminology of the transfer since it is not a confirmed, owed debt when the transfer is established – the ruling of this is like the second type.
Fourth type: Transfer of a non-debtor, such as transferring the individuals or organisations who want to donate money to a person or to an individual or organisation other than him – the transfer is valid in this way if the creditor and the middleman accept it.
Fifth type: Transfer based on a sale or a loan, which is when someone pays to another – individual or organisation such as a bank – money to take an exchange for it in another country. The ruling regarding this type is as follows:
1- If the money paid in exchange is of different type, such as if one party in Britain pays another one thousand pounds to take in France in its equivalent in Euros, such transfer is valid as a sale without any doubt; it is also valid as a loan but upon making it conditional to paying it with something of a different type if the value of the other type is equal to the value of the debt, otherwise it cannot be valid as a loan.
2- If the two are of the same type, here are two situations:
a- If they are equal in amount, in this case the transaction is valid as a loan without any doubt, but it is also valid as a sale upon observing the special rulings regarding the sale of things measured by weight or measure (measuring vessel) or postponed sale and the like.
b- If they are of different amounts, in this case if the paid amount is less than the amount taken in exchange, such as if one party in Britain pays one thousand pounds to someone to receive in exchange one thousand one hundred in another country, the transfer is not valid as a loan. It is valid as a cash sale, but invalid as a postponed sale as an obligatory precaution. But if the paid amount is more than what is taken in exchange, then it is valid as a loan and valid as a sale as explained in (a).