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AR-RAHNU(PAWNING/MORTGAGE)
FIQH MUAMALAT II
MGA 3043
PREPARED BY: NURUL AINI MUHAMED
VS
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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
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Owner of
debt/Creditor-
need to
secure hismoney
Owner of
pawned
object-need
for money
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 heldproperty 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 thedebtor
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
Debt?
Murtahin
bih
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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
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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 languageii) 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)
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Pawning conditions*
Contracting parties conditions
Eligibility: Hanafiis & Malikiis-as eligible for sale
Shafiis & Hanbali- as in the charity Cases i Guardian andplenipotentiarypawning childs or insane persons debt
of child's property debt of guardian
when the child reaches legalage
ii)Multiple transacting parties
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
Underlying debt conditions Hanafii- 3 conditionspawning 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
* 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 attachedie: 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
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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
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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, orboth-single contract is considered as multiple contract, unless the contractnames 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 pawnedproperty
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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 Shafiisseparate non-derivative growth-belongs tothe debtor
Malikis- all contiguous and non-separable growth +all non-contiguousoffspring or product of the property- part of pawning
-any increase that are not part of the same form of the pawnedobjects -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 tothe 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
Kadar upahbulanan bagisetiap nilaianRM100
RM 0.60RM 0.85RM 0.95
Nilai Marhun
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