Journal Of Islamic Denominations

Journal Of Islamic Denominations

A Comparative Study of Fraudulent Conveyance (Transaction with the Intent to Evade Debt) in Jurisprudential Schools and Legal Systems, and Its Impact on Contract Law

Document Type : Research Paper

Authors
Ali Khairkhah 1
Mehdi Norouzi 2
ali farsimadan 2
Reza Samiei 3
1 Ph.D. Candidate in Islamic Schools of Jurisprudence, University of Religions and Denominations, Qom, Iran
2 Assistant Professor, Department of Comparative Law and Jurisprudence, University of Religions and Denominations, Qom, Iran(Full member of the Scientific Association of Religions and Sects)
3 Ph.D. in Islamic Schools of Jurisprudence, University of Religions and Denominations, Qom, Iran
10.22034/jid.2025.535846.2591
Abstract
Fraudulent conveyance—transactions conducted with the intent to evade debt—represents a significant challenge in jurisprudence and contract law, consistently creating a tension between the debtor's right to dispose of property and the protection of creditors' rights. This phenomenon not only threatens the legal and economic security of creditors but also undermines public confidence in the institution of contract and its equitable functioning. Therefore, its jurisprudential and legal examination is an unavoidable necessity for ensuring justice and public order. The findings of this research indicate that some early Imāmī jurists, relying on the general principles of the Qur'an and Sunnah as well as the principle of validity (aṣl al-ṣiḥḥah), have deemed the transactions of a debtor to be effective (nāfidh). However, the majority of later Imāmī jurists, invoking rules such as lā ḍarar (no harm), lā ḥaraj (no undue hardship), and the negation of harmful authority (nafy al-sulṭān al-ḍarrī), have considered such transactions either ineffective (ghayr nāfidh) or void (bāṭil).
In Sunni jurisprudence (fiqh al-ʿāmmah), the restrictions stipulated by the four major schools indicate that a debtor's harmful dispositions that prejudice creditors are not legally effective. In Iranian law as well, legislative evolution—from former Article 218 of the Civil Code to the amended Article 218, subsequent Article 218 Mukarrar (bis?), and Article 4 of the Law on the Manner of Enforcement of Financial Judgments—demonstrates a clear trend toward invalidating such transactions.
The results of the study indicate that in all the legal systems examined, fraudulent conveyance (transaction with the intent to evade debt) enjoys no legal protection due to its incompatibility with fundamental principles of contract law, including freedom of contract, the binding force of contracts (luzūm), good faith, and public order. The jurisprudential and legal remedies devised to counteract such transactions are predominantly based on the principle of protecting creditors and preserving public confidence in contracts. This research has been conducted using a descriptive-analytical method, drawing on library-based sources.
Keywords
Transaction (Conveyance)
Evasion of Debt
Imāmī Jurisprudence
Sunni Jurisprudence (Fiqh al-ʿĀmmah)
Contract Law
The Rule of Lā Ḍarar (No Harm)
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