Sale of Debt — practice questions

Correct answer: A. Clause 4/1/1/1: A creditor may sell a debt to the debtor provided the sale does not lead to Riba. Where the debt is a Ribawi commodity and its consideration is a Ribawi commodity of a different kind (e.g. gold for silver, wheat for dates, one currency for another), possession of the consideration must take place in the contract session, even if the quantities differ. Where the consideration is of the same kind, equality and possession in the session are both required.

Correct answer: C. Clause 4/1/1/2: A creditor may recover a monetary debt in whole or part in another currency provided possession of the substitute is transferred in the contract session so that no part of the converted amount remains outstanding; early discharge in another currency is not stipulated, anticipated or customary; and, where the debt arose from a loan or the debtor delayed after maturity, the exchange rate prevailing on the day of settlement is used.

Correct answer: B. Clauses 4/1/2 and 4/1/3: The sale of a debt to the debtor must not be a device for Riba and must not establish a new, larger debt on the debtor; selling the debt to the debtor for a new, greater debt is prohibited Faskh al-Dayn bi al-Dayn. Using a debt as Salam capital and anything leading to an increase in the debt against a longer tenure, solvent or insolvent, including ’Inah-type substitutions, are likewise prohibited.