Gharar
From Islamic law
Religious and customary lawContract and obligations
What it means
Excessive uncertainty in a contract, about the existence, the quantity or the delivery of the thing being sold. Contracts with too much gharar are forbidden.
Why it travels badly
Common law has a rule that a contract must be certain enough to enforce, but this is a question of whether the parties agreed. Gharar is wider: it forbids contracts that carry a risk of the kind that might lead to dispute or exploitation, which affects insurance, futures and some derivatives.
How other systems say it
Islamic finance
gharar
A reason why conventional insurance and many derivatives are not used as they are. Takaful (mutual cover) is the alternative.
uncertainty of terms
Scammell v Ouston (1941): an agreement 'on hire-purchase terms' was too uncertain to be enforced.
indefiniteness and the statute of frauds
Courts ask whether the terms are definite enough to enforce.
Tip for translators and students
Explain that gharar is a religious prohibition with commercial effects, not the same as the legal uncertainty rule.
Related: Riba, Sharia and fiqh, Consideration
Updated October 2026. Spotted a mistake? Tell us.
TheLawToKnow Tools’s glossary is an educational overview of the main differences between legal systems. It is not legal advice.
