Is a stipulation void if the debtor states that the pledged item becomes the creditor's property upon failure to repay the debt by the due date?
General Chapter
Al-Mughni
Book of Pledges (Collateral)
Primary text
Such a stipulation renders the pledge void. This ruling is held by Ibn Umar, Shurayh, Al-Nakha'i, Malik, Al-Thawri, Al-Shafi'i, and the Ahl al-Ra'i (the scholars of opinion). The foundational evidence is the saying of the Prophet Muhammad, peace be upon him, "The pledge shall not be closed" (La yughlaq al-rahn), narrated by Al-Athram and derived from Mu'awiya ibn Abdullah ibn Ja'far. Al-Athram questioned Ahmad ibn Hanbal regarding its meaning, and he explained it means one does not give a pledge and stipulate that if the cash is not returned by a certain time, the pledge belongs to the creditor. This is invalid because it ties the sale contingent upon a condition, making the item sold on the condition that the right is not fulfilled on time, and a conditional sale is invalid. Therefore, if this condition is stipulated, the pledge becomes void.
Supporting text
It can be argued that the pledge does not become void based on the general principle regarding other void stipulations. This view appears to be the stance of Abu Al-Khattab in his work 'Ru'us al-Masa'il'. The evidence cited is that the Prophet's statement negated the 'closing' of the pledge, not its origin, suggesting the pledge itself remains valid. Furthermore, since the pledgor consented to the pledge with this condition, if the condition is void, the pledge should remain valid. However, the primary position holds that since it is a pledge conditioned upon a void stipulation, the pledge itself is void, similar to stipulating repayment in kind. Moreover, the narration does not specify if this condition was stipulated at the inception of the contract, thus lacking evidential weight for validity.