What is the ruling on recourse to the assignor if the assigned party defaults or goes bankrupt?
General Chapter
Al-Mughni
Book of Assignment (Transfer of Debt)
Primary text
The dominant view, supported by Al-Kharqi, Al-Layth, Al-Shafi'i, Abu 'Ubayd, and Ibn al-Mundhir, is that if the assignee accepts without stipulating solvency, the right never reverts to the assignor, whether fulfillment is possible or obstructed by default, bankruptcy, or death. However, there is a narration from Ahmad suggesting recourse if the assigned party is bankrupt and the assignee was unaware, unless the assignee agrees after knowledge. This is similar to the view of Malik, considering bankruptcy a defect. Another narration suggests recourse if the assigned party goes bankrupt or dies, based on a report concerning 'Uthman. Abu Hanifa allows recourse in two cases: when the assigned party dies bankrupt, or when he denies the debt and swears an oath. Abu Yusuf and Muhammad add bankruptcy restriction to these two cases, citing a report from 'Uthman.
Supporting text
The argument for recourse is that it is an exchange contract where the counter-value was not delivered to either contracting party, allowing rescission, similar to an exchange involving a garment. The rebuttal states that the Hadith of 'Uthman is not soundly narrated. Furthermore, treating it as a pure exchange invalidates it by leading to selling debt for debt, which is prohibited. It differs from exchanging garments because, in the garment sale, possession is required for the contract's finality, whereas here, assignment functions as possession; otherwise, it would be selling debt for debt.