Gharar (Uncertainty)
Prohibition of excessive ambiguity or deception in contracts.
Detailed Description
Gharar (Uncertainty)
What does gharar mean?
Gharar means 'uncertainty' or 'ambiguity' in Arabic, referring to excessive uncertainty or risk in transactions.
Why is gharar prohibited in Islamic finance?
Gharar is prohibited because it contradicts the principles of justice and fairness outlined in Shariah law.
What are some examples of gharar?
Examples include uncertain pricing, ambiguous terms, speculative contracts, and contingent contracts.
How does gharar impact contracts in Islamic finance?
Contracts with excessive gharar may be deemed void or unenforceable under Shariah law, affecting trust in financial systems.
How does Islamic finance differ from conventional finance regarding uncertainty?
Islamic finance seeks to eliminate gharar, promoting ethical investing, while conventional finance often accepts uncertainty as part of risk management.