Set-off of debts (muqasa)

Muqasa is the set-off of a debt that a person can claim from his debtor against a debt that person owes the debtor in return; it is one way debts are discharged. ¹

Muqasa is one debt cancelling another of equal kind under conditions; hawala moves a debt from one debtor to another; ibra' is release without return, while muqasa is release for a consideration. ^{1 2}

Muqasa is lawful. The transmitted evidence is the report from Ibn 'Umar about exchanging camels at al-Baqi', in which the Prophet ﷺ says there is no harm in taking the price on the day's rate so long as the parties have not parted with something owed between them; the rational argument is that a debt cannot be taken in kind, so it is taken by its equivalent. The source notes that the report is weak. ²

Muqasa is voluntary when the two debtors agree, and compelled when two debts meet under conditions. The majority require for compelled set-off that the two debts match in kind, quality, due date and strength; voluntary set-off needs none of this. The Malikis rarely hold set-off to be compelled. It is always for the lesser of the two debts. ^{3 5}

The Malikis distinguish cases by whether the kinds match, whether the debts arise from sale or loan, and whether they are due, and set out when set-off is permitted and when forbidden. The Shafi'is require debts fixed in the liability, not specific goods; that they be in money; that both be settled; that they match in kind, type, due date and term; and that the matter not concern retaliation or a fixed penalty. The Hanbalis allow set-off between two cash debts of one kind that are due or share a term, and forbid it between cash of different kinds. ^{5 6 7 8 9}

In zakat, a debt owed by a poor man does not count as zakat until he has been paid and returns it, in the sounder Shafi'i view. The Hanafis allow a husband to set his claim against a wife's maintenance only by consent; the Hanbalis allow it if she is solvent. In usurpation and deposits the Hanafis hold that the item must be in the hand of its holder before set-off applies. Salam, guarantee, waqf and bequest have their own rulings, given in their places. ^{9 10 11 12 4}