Is it valid to take an object as collateral (*rahn*) when that object is considered a guaranteed thing (*ayn madhmoon*)?
Chapter on Guaranteed Salaf (Advance Payment) for a Specified Term
Al-Mughni
Book of Sales
Primary text
There are two scholarly views regarding taking collateral on objects that are guaranteed, such as usurped property (maghsoob), borrowed items (a'wari), property seized under a void sale, or property held under a bid/offer (sum). According to the opinion supported by Al-Shafi'i, taking such an object as collateral is invalid. The reasoning is that the right is not firmly established in the debtor's liability (*dhimma*), similar to cases already discussed. Furthermore, if the collateral is taken based on its value should it perish, it constitutes collateral on something not yet obligatory, whose necessity to become obligatory is unknown. If the collateral is taken specifically for the object itself, it is invalid because the object's physical item cannot be recovered from the collateral, resembling specific items in void sales.
Supporting text
The second view, held by Abu Hanifa, permits taking collateral on such objects. He states that every object guaranteed by its physical form may be used as collateral. This applies to items guaranteed by their likeness or value, such as goods sold (which are guaranteed due to the void contract). The purpose of collateral is satisfied by providing security for the right, as having this collateral compels the pledgor to return the item. If returning the item becomes impossible, its value is recovered from the price of the collateral, thus making it analogous to a debt in the liability.