A person sold his business

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Ref no: 0391#

Date: Thursday, September 29, 2011

 

Category

Business

Title

 

A person sold his business

Question

 

A person sold his business. Among the conditions of sale was that the purchaser pay out all the creditors of the business. The creditors were not consulted. Now that the new owner is insolvent and has not yet paid the previous owner – who is responsible for those debts?

 

 

Answer

 

Muhtaram / Muhtaramah

 

In the Name of Allāh, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāh wa-barakātuh.

 

According to Shari’ah, in order for the transfer (Hawala) of a debt to be valid, besides the original owner of the business and purchaser, the creditor(s) must also consent to the transfer of the debt. Since the creditor(s) did not consent to the transfer of the debt, the previous owner of the business is responsible for those debts. (Raddul Mukhtaar vol.4 pg.321; Kuwait)

 

 

And Allah knows best
Darul Iftaa

Madrasah Inaa’miyyah

 

 

·         The Sharée ruling herein given is specifically based on the question posed and should be read in conjunction with the question.

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