What is the ruling if the pledgee gives unconditional permission for the pledgor to sell the pledged item before the debt term expires?
General Chapter
Al-Mughni
Book of Pledges (Collateral)
Primary text
If the pledgee gives unconditional permission before the debt is due, and the pledgor sells the item, the pledge itself is nullified, and the pledgee has no right to the sale price as compensation. This is because the permission was for an act inconsistent with the pledgee's right, akin to permission to free a slave. The owner retains the right to the sale price. Al-Shafi'i holds this view.
Supporting text
Abu Hanifa and Muhammad hold that the sale price becomes the substitute pledge, because the pledgor sold the item with the pledgee's consent, establishing the right in the price, just as if the debt was due. Al-Tahawi asserts that since the pledgee's right is attached to the item itself, and the price is its substitute, the right must transfer to the price, similar to when an external party destroys the item.