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Gharar In Islam

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Gharar
In Arabic, gharar literally means risk, uncertainty, fraud or hazard that might lead to loss or destruction. Gharar in Islam refers to any transaction of probable objects whose existence or explanation are uncertainty, due to inadequacy of information and knowledge of the eventual result of the contract or the nature and quality of the subject matter of it.. It is generally prohibited under Islam, which explicitly forbids trades that are considered to have excessive risk due to uncertainty. For example, Islam has clearly prohibited all business transactions which lead to taking advantage and unfair in any form to any of the parties of a contract. It look for protecting the different parties from concealing and unawareness by in any commercial exchange contracts that are not freely from hazard, risk or speculation about the essential elements in the transaction to either party or uncertainty of the ability of one party to honors its rights. It requires that all Islamic financial and business transactions must be based on accuracy, transparency and declaration of all necessary information so that no one party has taking advantage over the other party. In Quran says:
“O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent. And do not kill yourselves (nor kill one another). Surely, …show more content…

So, there has some suggestion that ulama had been agreed that the basis of insurance contract which is an exchange contract (buy and sell) must be change to another type of contract in order to eliminate the objectionable elements. Thus the Islamic concepts that can be replaced in the conventional insurance are based on concept of protection, cooperation or mutual help, and mutual responsibility (Kamaruddin Shariff, 1998). These concepts have their basis in the Quran and the Sunnah. Allah says to the

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