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Kafalah is one of the age-long transactions evolved by man to bridge the gap that may exist in financial dealings as a result of the parties’ lack of confidence, suspicion and lack of detailed knowledge of one another on the one hand. On the other hand, it gives assurance that a particular person would discharge his obligation in certain relationships without being constrained for lack of such assurance.

In its literal usage, kafalah means surety, bail, guarantee, responsibility or amenability. It was in this literal sense that Allah used the term in the holy Quran where He says: ? ?  ?  ?     ?  ?  ?  ?  ?  ??  ?

Meaning: So, her Lord (Allah) accepted her with goodly acceptance. He made her grow in a good manner and put her under the care of Zakariyya….” (Q3:V37).

The term “Kafalahah” as used in the verse was a reference to the upbringing of Maryam the mother of Prophet Isa under the responsibility of Prophet Zakariya. In this same manner, Prophet Muhammad-peace be upon him- used the term where he was reported to have said that: “I and whoever takes responsibility of the orphan are companions in the garden of Eden”

Legally, the term surety is defined as the conjoining of a guarantor’s dhimma (faculty by which a person bears liabilities) to that of the guaranteed in a way that the debt or other responsibility of the original bearer is established as a joint liability of the two of them. It may relate to a person, finance or act (performance). Kafalah relating to a person involves the production of the person for whom the kafalah (bail) has been given. Kafalah relating to finance implies an obligation. Kafalah relating to an act or performance ensure the performance of a certain act, the failure of which may render the surety liable and responsible.

Legality of Kafalah

Contract of surety ship finds its bases from the Quran, Sunnah and Consensus of Muslim jurists. In the Quran the event of Prophet Yusuf and his brothers where the former feigned the loss of the King’s measure and stood guarantor for a reward for whoever retrieve it gave validity to the contract under the Islamic law.

 ? ?  ?  ?  ?      ?  ?  ?   ?  ?   ?  ?  ?  ?  ?

Meaning: They said: "We have lost the (golden) bowl of the king and for him who produces it is (the reward of) a camel load; and I will be bound by it.” The word za’eem used in the verse signifying being bound by obligation was said to have been interpreted by Ibn Abbas to mean Kafeel i.e. guarantor.

In further validation of the contract, the Prophet (peace be upon him) was reported to have gone for the funeral of a man to pray for his soul. He asked those present at the funeral: “did he leave any wealth?” they replied “No.” He asked further, “did he die with any debts outstanding?” they replied “yes, he owed two Dinar” The Prophet-peace be upon him- was about to leave when he said “then pray on your companion.” Abu Qatadah intercededand said: “I guarantee his debt, Oh Messenger of Allah” and the Prophet (peace be upon him) then prayed on his soul.

The Muslim jurists are also unanimous on validating contract of guarantee because it is essential for a flow of commercial dealings as it gives protection to the debtor and assurance and confidence about repayment to the creditor. In financial transactions, guarantee is intended to secure obligations and protect amount of debts from being uncollectible or from being in default.

 

Composition of contract of Surety

Majority of the Muslim jurists comprising of Maliki, Hambali, Shafi?i and some views in Hanafi schools agreed on four components of a contract of surety. These are: (a) the guarantor with capacity to transact in his own property, (b) a right susceptible to representation, (c) the form (offer by the guarantor) and (d) the principal bearer of the liability dead or alive.

 

Conditions for the validity of kafalah contract

Several conditions are stipulated for the validity of kafalah contract. The conditions relate to the guarantor, the guaranteed, object of the guarantee and details of the language of guarantee contract. As for the guarantor, Muslim jurists are unanimous on the requirement that he must have legal capacity to enter into gratuitous contract relating to his property and must as well be free from restriction to enter into the contract. These two conditions exclude a child and an insane as well as a slave from being guarantors. However, these conditions are extended by Maliki jurists by further excluding a woman from guaranteeing a liability that covers more than 1/3 of her property without the consent of her husband.

Divergent views emerged as to the conditions to be satisfied by the guaranteed. Abu Hanifa excludes a bankrupt deceased person from eligibility to guarantee as according to him, all liabilities on the juristic personality of a deceased person must have perished with his death. However, his two disciples, Abu Yusuf and Muhammad and jurists of Maliki and Shafii schools viewed differently. They relied on the hadith of Abu Qatadah to insist that the debt of a deceased person whose estate cannot repay his debt can be guaranteed. Shafii and Hanbali jurists also held contrary views to Hanafis insistence that a debtor to be guaranteed must be known to the guarantor. This the former said is unnecessary since the debtor’s acceptance is not required to form the contract and guarantee as a charitable act can be directed to anyone.

With regards to the object of guarantee, jurists are unanimous that a financial debt must be a valid and binding one to be guaranteed. This excludes non-debts like the ransom to be paid by a slave given the option of freeing himself and alimony payment by a husband of a divorcee before the option of enfranchisement is made or before the alimony is agreed upon respectively.

The majority of Muslim jurists, comprising of Hanafi, Maliki and Hambali jurists also opined that the object of financial guarantee must be such that can be retrieved from the guarantor. This invalidates a guarantee to receive physical punishment because receipt of physical punishment cannot be done in proxy.

 

Exoneration of the Principal debtor

When a debt is guaranteed, majority of the Muslim jurists are of the view that the guarantee does not exculpate the principal debtor i.e. the guaranteed from his original liability. To them, guarantee is only meant to assure the payment and to give the creditor option of claiming from either party, except where extrication of the principal debtor is a condition of the guarantee agreement. Within this majority, jurists of Shafii school disallow stipulating such condition which they viewed as contradicting the nature of the contract and seen as more of transforming the contract to hawalah (transfer of debt).  Also, in the exercise of the option of demand of debt, Imam Maliki prioritized demand from the principal debtor first allowing the demand from the guarantor only when demand form or repayment by the principal debtor has become impossible.

 

Types of Kafalah

As would be noticed from the definition above, kafalah is of two types i.e. kafalah bi al-nafs (physical) and kafalah bi al-mal (financial). Physical guarantee or suretyship for the person is also known as Daman Wajh. This is an assumption of liability for the appearance of the debtor or of his agent in a law suit. Under this guarantee, it is permissible for a person to guarantee the safe delivery of another for a specified period of time. Where this is done, it is the view of the majority of the Muslim jurists that the guarantor is required to deliver the guaranteed person at the end of the specified period and is not responsible for immediate delivery. However, Abu Yusuf of the Hanafi School opined that the guarantor may be required to deliver the guaranteed person at any time and would continue to be so responsible until the expiration of the specified time. This latter view has been said to agree with the common practiced based on custom.

 

Modes of Kafalah

A guarantee may either be unrestricted, restricted by description, suspended pending a condition or deferred. A guarantee is unrestricted when it is given plainly on the same term as the original debt for which it was created. No new condition or description different from the terms of the original debt is introduced for the convenience of either the guarantor or the principal debtor. The creditor only needs to wait for the debt due date and lay claim to either the debtor or the guarantor.

A restricted guarantee is restricted by its description either as current or deferred guarantees. While a current guarantee operates within the term of the original debt, it is also permitted to restrict the operation of guarantee through deferment to a specified date. It makes no difference whether or not the terms of the deferred guarantee coincide with the terms of deferment of the guaranteed debt. The right of demand remains with the creditor and he has the freedom of contract to enter into different agreement with both the debtor and the guarantor. On this basis, jurists of the four schools of Islamic jurisprudence allow deferred guarantee of current debt and current guarantee of deferred debt. Where a deferred guarantee is given for a current debt, the implication may be to the added advantage of the principal debtor or to the guarantor only. If a deferred guarantee is introduced at the initial stage of a current debt contract, the debt automatically becomes deferred. If however, it is given after the conclusion of the contract, the deferment is going to be to the benefit of the guarantor only.

A guarantee contract can also be suspended on the happening of an event, thereby hanging the liability of the guarantor for the debt until the stipulated event happens. For instance where a person says: “I guarantee the payment of the debt of the due date”, he cannot be made answerable for the debt call back before the due date. However, the permissibility of the mode is premised on the requirement that the condition upon which the guarantee is suspended must not contradict the object of the contract of guarantee itself. In other words it must not be such that would make the realization of the debt impracticable. Otherwise, the suspending condition would be nullified and the guarantee would be established as current.

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