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Al-Majallah al-Ahkam al-‘Adaliyyah
Chapter 2: The Effect of a Contract for the Transfer of Debt.
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The effect of a contract for the transfer of a debt is that the transferor,
and his guarantor, if any, are liberated from all responsibility for the
debt. The person in whose favour the contract is made then has the right
of demanding payment thereof from the transferee. A pledgee who transfers
his right to claim the debt from the pledge or to some third person loses
all right of retention over the pledge.
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If any person who makes an absolute transfer of a debt has no claim against
the transferee, the latter may have recourse against the former, after
he has paid his debt. If such person has a claim against the transferee,
the amount of the claim is set off against the debt after payment has been
made.
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In the case of a restricted contract for the transfer of a debt, the transferor
loses his right to claim on account of the subject matter of the transfer.
The transferee is under no obligation whatsoever to give the subject matter
of the transfer to the transferor. If he does so, he is liable to make
good any loss resulting therefrom. Upon making good, such loss, he has
a right of recourse against the transferor. If the tranferor dies before
making payment, his debts being greater than the value of his estate, the
other creditors have no right to touch the subject matter of the transfer.
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If a restricted contract for the transfer of a debt is concluded whereby
payment is to be made from the sum to be received in respect to the price
of a thing sold due to the vendor from the purchaser, and the thing sold
is destroyed before the delivery, the price in consequence being no longer
due, or if the thing sold is returned by virtue of a contractual option,
or by reason of an option of inspection or an option for defect, or if
the sale is rescinded, such transfer is not void and the transferee has
a right of recourse against the tranferor after payment. That is to say,
he may obtain what he has given from the transferor. But if any person
appears who is entitled to the thing sold and takes possession of the same
whereby it is proved that the transferee is free from the debt, the contract
of transfer is void.
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If a restricted contract for the transfer of a debt is concluded whereby
payment is to be made from a sum of money deposited on trust by the transferor
with the transferee, and some person appears who is entitled to such money
and takes possession of the same, the contract of transfer is void, and
the debt reverts to the transferor.
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If a restricted contract for the transfer of a debt in concluded whereby
payment is to be made from a sum of money belonging to the transferor in
the possession of the transferee, and such sum of money is not subject
to compensation, the contact is void and the debt reverts to the transferor.
If it is subject to compensation, however, the contact continues in force.
Example: A transfers to C a debt which is due to B, to be paid from money
which he has deposited with C on trust, and such money is lost without
any fault being attributable, before payment is made. The transfer is void
and the sum due to the creditor reverts to the transferor. If such money
has been wrongfully appropriated, or if, being deposited on trust, it has
been lost by the act of C and must be repaid by him, the contract is not
void.
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If any person transfers a debt to some other person and provides that payment
is to be made from the price realised on the sale of some specific property
of his, and such person agrees to the transfer on that condition, the contract
is valid, and the transferee is bound to sell the property and pay the
debt from the price realised.
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In the case of a vague transfer of debt, that is to say, in the case of
a transfer of debt where it is not stipulated whether the subject matter
of the transfer is payable forthwith, if the debt is likewise payable forthwith
by the transferor. If the debt is payable at some future definite date,
the transfer is of the same nature, and payment must be made when the debt
falls due.
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There is no right of recourse against the transferor until the transferee
has paid the debt; and when recourse is made, the subject matter of the
transfer may be claimed. That is to say, the transferee takes from the
transferor exactly the same type of money that was the subject of the transfer.
He cannot, however, claim the identical money which has been paid.
Examples: (1). Silver money is transferred. Payment is made in gold. Silver
money may be claimed from the transferor and not gold.
(2). Payment is made with goods and effects. The money which was the subject
of the transfer may be claimed.
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If the subject matter of the transfer is paid, or it is transferred to
some other person, or the person in whose favour the transfer is made liberates
the transferee from the debt, or the person in whose favour the transfer
is made makes a gift of the subject matter of the transfer or disposes
of it as alms and the transferee accepts, he is liberated from the debt.
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In the event of the death of the person in whose favour the transfer is
made, and of the transferee becoming his heir, the transfer becomes devoid
of effect.
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