FIQH MUAMALAT 
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Chapter 5: Concept Of Contract Chapter 6: Sale-Based Transactions 1 Chapter 7: Sale-based Transactions 2 Chapter 8: Mudarabah Chapter 9: Musharakah Chapter 10a: Ijarah Chapter 10b: Rhan Contract Chapter 11a: Kafalah Chapter 11b: Wakalah Chapter 12: Bay al-Dayn Chapter 13a: Wadi'ah Contract Chapter 13b: Contract of Sarf
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    Definition of Bay al-Dayn



    What is the definition?
    • Bay al-Dayn refers to the sale of debt.

    Who are the parties involved?
    • The debt can be sold directly to the debtor.
    • The debt can also be sold to a party other than the debtor (a third party).

    What are the payment terms?
    • The sale can be conducted on a spot basis (immediate payment).
    • It can also be conducted on a deferred payment basis (payment at a later date).

    Authority of Bay al-Dayn (Jurist Views)



    Consensus on Sale to Debtor
    • The majority of Islamic jurists are unanimous (fully agreed) that the sale of debts to the debtor is permissible.

    Consensus on Prohibition (The "Red Line")
    • Scholars generally agree that it is prohibited to exchange one delayed counter value for another delayed counter value.
    • This prohibited transaction is legally known as Bay al-Kali’ bi al-Kali’.

    Disagreement on Other Types
    • For other types of Bay al-Dayn (such as selling to a person other than the debtor), Muslim jurists hold different opinions and there is no full consensus

    Types of Bay al-Dayn


    A. Sale of Debt to the Debtor (Spot Basis)
    • The Ruling: The large majority of Islamic jurists allow this.
    • The Logic: Even though debt is intangible, what is established in the Dhimmah (liability) is considered Hadir (existent/present) in actuality.
    • The Conclusion: It is treated as Bay al-Hadir bil Hadir (exchange of an existing counter value for another existing counter value), so there is no dispute.

    B. Sale of Debt to the Non-Debtor (Spot Basis)
    • Hanafi View: Disallowed. They argue it is risky because the seller (creditor) might fail to deliver the debt to the buyer, unlike selling directly to the debtor.
    • Maliki View: Permissible, but strictly subject to conditions.

    • Key Maliki Conditions:
    • Payment must be on the spot.
    • The debtor must be present and confirm the debt.
    • The debtor must have legal capacity.
    • If the debt is gold, it cannot be sold for silver (must follow Riba rules).
    • There should be no enmity between the debtor and the buyer.

    C. Sale of Debt to a Debtor (Deferred Price)

    • Majority View (Hanafi, Maliki, Shafie): Prohibited.
    •  Reason: It is considered a form of selling debt against debt, which is forbidden.
    • Minority View (Ibn Taymiyyah, Ibn al-Qayyim): Permissible.

    D. Sale of Debt to a Non-Debtor (Deferred Price)
    • Majority View (Hanafi, Maliki, Shafie, Hanbali): Impermissible because it causes direct harm to the creditor.
    • Minority View (Ibn Taymiyyah, Ibn al-Qayyim): Permissible.
    • Reason: They use Qiyas (analogy) to compare it to a Hiwalah contract (transfer of debt).

    Application in Islamic Finance



    Purpose in the Market
    • Bay al-Dayn is widely used in Islamic securities.
    • It is used for liquidity purposes or to achieve capital gains through the trading of certificates of debt.

    View 1: The Certificate is Money (Majority View)
    • Most contemporary Muslim scholars view the certificate of debt as money.
    • Reason: The underlying asset of the certificate is monetary debt.
    • Rule: The rules for exchanging money with money must apply.
    • Result: Selling these certificates at a discount or premium is not permissible.

    View 2: The Certificate is Property (Alternative View)
    • Some contemporary scholars argue that the certificate of debt is equal to Mal (property).
    • Reason: It is supported by some underlying assets via the Inah sale.