FIQH MUAMALAT II MGA 3043

AR-RAHNU (PAWNING/MORTGAGE)
VS

PREPARED BY: NURUL AINI MUHAMED

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Points discussed in this topic

General characterization Legality Cornerstones and components Forms of pawning Conditions of pawning Legality and consequences Termination of ar-Rahnu contract Debtor creditor disputes

Definition and General characterization

Ar-rahn in Arabic- to constancy, holding and bindingness Ar-rahn=pawning Hanafiis- holding an item in lieu of a legal right that may be satisfied from that item Shafiis-Taking a non-fungible property as insurance against debt, whereby the debt may extracted from the held property if it is not repaid Hanbaliis- A pawned object is a property used as insurance for a debt, so that the debt may be extracted from the property if it is not possible to recollect from the debtor Malikiis- Pawning is the act of taking a valued property from its owner, as a mean of insuring a loan that has matured or is about to mature ---can be---animal, usufruct etc.

Pawning? Rahn Pawned object? Marhun

Debtor? Raahin
Owner of debt/Creditorneed to secure his money Owner of pawned object-need for money

Debt? Murtahin bih

Legality

Quranic versus:
If you are on a journey and cannot find a scribe, then use the receipt of pawned object (2:283)

Hadith narrated by Al-Bukhari

Muslims consensus on its permissibility

Cornerstone and components

Components Debtor (owner the pawning object) Creditor (owner of the debt) Pawned object Debt

Cornerstones Hanafiis- offer and acceptance Non-Hanafiis- 4 cornerstones: i) contract language ii) contracting parties iii) pawned object iv) underlying debt
Owner of debt/Creditor-need to secure his money Owner of pawned object-need for money
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Forms of pawning

Pawning originates together with the debt generating contract ie: credit sale Pawning originates after the debt is established ie: the same as secured written document as Pawning originates prior to the establishment of a debt -view pawning as insurance (Malikis & Hanafiis) -pre-pawning not valid (Shafiis & most Hanbalis)

Pawning conditions*
Contracting

parties conditions Eligibility: Hanafiis & Malikiis-as eligible for sale Shafiis & Hanbali- as in the charity Cases i Guardian and plenipotentiary pawning of child's property ii)Multiple transacting parties

childs or insane persons debt debt of guardian when the child reaches legal age

Contract

language condition Hanafiis-contract neither be suspended because of conditions nor be deferred Shafiis- 3 types of conditions, valid conditions, nugatory ( no benefit) and conditions lead to defective contract Maliki-valid and defective Hanbali-valid and defective debt conditions Hanafii- 3 conditions pawning object must be binding as a liability on debt -the creditor is eligible for pawned object to reimburse the debt -liability underlying a pawning contract must be known to all parties

Underlying

* Based on Hanafi unless specified

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Pawning conditions

Pawned Object Conditions Eligibility for sale Being a property Being valued-valued for Muslim, the pork and alcohol thus cannot be used as object Being known Being owned Not being attached ie: pawn a land must together with plan -house together with furniture---however pawning furniture alone without the house is accepted Being separate

Being clearly identified

Receipt of the pawned object Specific consequence on pawning conditions

Legal Status and consequences of pawning contract

Invalid pawning contract and defective contract Hanafiis- contract is invalid if it has a major defect at the foundation of the contract-such as on the components -contract is defective if the defect comes from the characteristic of the contract non-Hanafiis-no different between invalid and defective Bindingness Majority- after receipt of the pawning object

Maliki- by the conclusion of the offer and acceptance

Consequences of pawning contract: 10 consequences

After the contract is completed and the creditor receives the pawned object

Association of the underlying contract- single or multiple contracts

Hanafis- Depends on language, regardless of the level of pawned object Malikiis-If pawning debtors were multiple or creditors were multiple, or both-single contract is considered as multiple contract, unless the contract names singles an individual from each party

The right to hold the pawned object Demanding repayment

Safeguarding the pawned property

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Consequences of pawning contract: 10 consequences

The pawned objects expenses

Utilization of the pawned property-pawning debtor utilization - pawning creditor utilization

Dealing in the pawned property-debtor dealing -creditor dealing Guaranteeing pawned property-creditors possession -types of guarantee - Consumption of pawned property
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Consequences of pawning contract: 10 consequences

Selling pawned property-right to sell -selling perishable pawned property -priority claim of the creditor -transfer of ownership to the creditor -3rd party settlement after sale Delivery of pawned property Ruling for defective pawned object

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Growth of pawned property

General-any increase comes from the pawned object belongs to the debtor Level of the increase and implications: Hanafiis- contiguous increases and separate growth in the pawned object -part of pawning Hanafis, Malikis and Shafiis separate non-derivative growth-belongs to the debtor Malikis- all contiguous and non-separable growth +all non-contiguous offspring or product of the property- part of pawning -any increase that are not part of the same form of the pawned objects -not regarded as pawning Shafiis- contiguous growth, increase in size etc-part of pawning -identifiable growth (separate or non-separate) not part of pawning--belongs to the debtor Hanbali- all increase - considered as part of pawned object and belong to the creditor
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Growth of pawned property

Adding to the pawning or debt -Pawning-Zufar -Debt-2 opinions

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Pawning contract termination

Returning property to debtor The underlying debt is fully repaid The judge forces the debtor to sell the property or he sells with the debtors reluctance-exception if the sales with the creditors permission The creditor void the contract

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Debtor creditor disputes

Disputes over underlying debts Destruction of the pawned property Disputes over receipt Dispute over receipt Dispute over time of destruction Dispute over the pawned property Dispute over possession

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Practical side: Calculation of the fee on the debtor

Nilai Marhun

Kadar upah bulanan bagi setiap nilaian RM100

RM 0.60 RM 0.85 RM 0.95

RM 1.00 - RM 400.00 RM 401.00 - RM 2,000.00 RM 2,001.00 keatas

Source: Ar-Rahn (2008)

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Wassalam

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