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HIWALAH - Coggle Diagram
HIWALAH
Basic rules
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transferor must be a debtor to transferee. in restricted hiwalah, payee must be debtor to transferor
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the transferred debt must be equal in terms of kind, type, quality and amount
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Legal consequences
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the transferee will have no right of recourse against transferor for payment. but, if hiwalah was based on condition that payer must solvent, transferee have right to do that if payer not solvent
transferor is not entitled to reclaim debt from payer amount transferred to the payer in respect debt to be settled
transferee entitled to have a right of recourse against transferor if payer declared bankruptcy, payer denies, death of payer in banktruptcy.
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Types
Hiwalah Muqayyadah
a transaction where payer restricted to settle amount of the transferred debt from the amount of financial or tangible asset belongs to transferor & is in possession of the payer
Hiwalah Mutlaqah
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payer undertakes to pay amount of debt owed by transferor from his own funds & recourse afterwards to the transferor for settlement