Gharar
غرر
Excessive uncertainty or ambiguity in a financial contract.
Gharar occurs when the terms of a contract are unclear or unknown to one or both parties. It is different from normal business risk. Buying a house you have not inspected, for example, involves gharar because you are agreeing to pay without knowing what you are getting.
Islamic perspective
Gharar is prohibited because it can lead to disputes and exploitation. This is why conventional insurance (where you pay premiums but the payout is uncertain) is considered problematic, and why Takaful was developed as an alternative.
Example
Selling "the fish in the sea" before they are caught is classic gharar. You are agreeing to buy something that does not yet exist in a defined form.
Learn more in