Al-Hawalah

12-Jul-14 1
Lecture Outlines
Definition
Shariah Rulings of al-Hawalah
Pillars (and conditions) of al-Hawalah
Ayat and ahadis al-ahkam
Types of al-Hawalah according to Al-Hanafiyyah
Al-Suftajah ()
Al-Hawalah in practices
Topics for the discussion in the tutorial classes
Al-Hawalah in the practice of Islamic banking institutions???
Travellers check
Demand draft
Revolving Credit Card Facility
12-Jul-14 2
Definition
al-Hawalah ()
Definition of al-Hawalah contract:
Literally: transfer; move; shift

Technically: A contract that transfers a debt from one debtor
(transferor) to another (transferee); A contract that transfers a debt on
a person to another (who has the same amount of debt for the first
person) for a specified creditor.
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Definition
From the definition, we could understand that al-Hawalah is a
secondary contract. It can only exist if there are debts
between the parties involved. In other words, debt contracts
should precede al-hawalah contract.

It is also observed that al-Hawalah, according to the Islamic
jurisprudence, refers to the transfer of DEBT and not MONEY.

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Definition
The jumhur state that the debtor who transfer his debt is
freed from his respective obligations except according to al-
Hasan al-Basri & Zufar.

If there is no debt obligation between the transferor and
transferee, the contract is then considered as al-wakalah
according to al-Hanafiyyah.
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Shariah Rulings
al-Hawalah is permissible according to al-Sunnah
and al-Ijma.
It is a hadith reported by al-Bayhaqi
Delinquency of rich debtors is a form of transgression, so if
one of you has his debt transferred to a rich person, let him
accept the transfer of debt .



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Pillars of al-Hawalah
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al-Hawalah
Parties
Subject Matter

Format
Al-Qabul Al-Ijab
Al-Hanabilah
Al-Hanafiyyah
Debt on
for






Debt on
for

Al-Malikiyyah & Al-Shafiiyyah
Relationship
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RM1000
A B
C
Debt on A for B
RM1000
Debt on C for A
RM1000
C should settle the debt
payment to B and could
not claim the amount
paid from A
1
2
3
Types of al-Hawalah
There are two main types of al-Hawalah according to al-
Hanafiyyah:

1- Hawalah Mutlaqah ( ): The debtor transfer a debt to
his creditor/another person without specifying the debt that
is subject to al-Hawalah practice.

2- Hawalah Muqayyadah ( ): The debtor transfer a debt
to his creditor with specifying the loan that is subject to al-
Hawalah contract.
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Types of al-Hawalah
The second type of al-Hawalah is agreed upon by the jurists as
al-Hawalah.

However, the first type of al-Hawalah is considered as al-Kafalah
according to al-Malikiyyah, al-Shafiiyyah & al-Hanabilah.
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Suftajah ()
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Ibn Zubair
Musab Ibn Zubair
Ahmad
Suftajah
RM1000
MECCA
IRAQ




1
2
3
Scholars opinion of Suftajah
Ibn Abbas, Ali, Ibn Sirin and Al-Nakahie: Mubah
Al-Hanafiyyah & al-Shafiiyyah: Makruh
Al-Hanabilah: Two opinions Haram & Mubah
Al-Malikiyyah:
What is easy to be carried: Mubah
What is difficult to be carried: Haram, except that if the journey is not
safe.
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Al-Hawalah in Practices
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RM1000
A B
C
RM1000
Al-Hawalah
1
2
3
Al-Hawalah in Practices
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/

/

RM1000
A B
C
Al-Wakalah: Al-Hanafiyyah
Al-Kafalah: Al-Malikiyyah, AL-
Shafiiyyah, Al-Hanabilah
Discussion
Al-Hawalah in Demand Draft ? Or other else?

Al-Hawalah in Travellers Check ? Or other else?

Al-Hawalah in Revolving Credit Card Facility?
12-Jul-14 15
Travellers Cheque
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Travellers Cheque (wakalah bil-ujrah)
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Hotel
Ahmad CitiBank
TC
TC
1
2
3
Demand Draft (wakalah bil-ujrah)
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Payee
Drawee Drawer/Payor Bank
RM1000
RM1000
1
2
Revolving Credit Card Facility (kafalah)
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Hotel
Client Bank
RM1000
RM1000
1
2
3
Promise of lending
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Q & A Session