When pledged property perishes in the pledgee's possession, Quduri compares the legally relevant value of the pledge with the debt due. The lesser amount governs the special pledge liability.
Rule: Amount set off against the debt = the lesser of the collateral's value and the debt.
The calculation matters when the asset is lost while pledged. Equal amounts lead to complete constructive satisfaction of the debt; unequal amounts require further analysis.
These teaching examples assume loss without wrongful interference; deliberate destruction or misconduct has distinct rules.
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The lesser-of-two-values rule
Kitab al-Rahn: Pledge Formation, Possession, Liability and Eligible Collateral
When pledged property perishes in the pledgee's possession, Quduri compares the legally relevant value of the pledge with the debt due. The lesser amount governs the special pledge liability.
Rule: Amount set off against the debt = the lesser of the collateral's value and the debt.
The calculation matters when the asset is lost while pledged. Equal amounts lead to complete constructive satisfaction of the debt; unequal amounts require further analysis.
These teaching examples assume loss without wrongful interference; deliberate destruction or misconduct has distinct rules.