Glossary of Islamic Financial Terms

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Fatwah
A religious decree.

Fiqh
Islamic jurisprudence. The science of the Shariah. It is an important source of Islamic economics.

Gharar Lit
Uncertainty, hazard, chance or risk. Technically, sale of a thing which is not present at hand; or the sale of a thing whose consequence or outcome is not known; or a sale involving risk or hazard in which one does not know whether it will come to be or not, such as fish in water or a bird in the air. Deception through ignorance by one or more parties to a contract. There are several types of gharar, all of which are haram. The following are some examples:

•	Selling goods that the seller is unable to deliver
•	Selling known or unknown goods against an unknown price
•	Selling goods without proper description
•	Selling goods without specifying the price
•	Making a contract conditional on an unknown event
•	Selling goods on the basis of false description
	Selling goods without allowing the buyer to properly examine the goods

The root Gharar denotes deception. Bay' al-Gharar is an exchange in which there is an element of deception either through ignorance of the goods, the price, or through faulty description of the goods. Bay' al-Gharar is an exchange in which one or both parties stand to be deceived through ignorance of an essential element of exchange. Gambling is a form of Gharar because the gambler is ignorant of the result of his gamble.