Understanding Islamic Finance - Doha Academy of Tertiary Studies

The Main Prohibitions and Business Ethics 59has not reported the Hadith on Bai‘ al Gharar but captioned a chapter “Al Gharar Sale andHabal-al-Hablah” (i.e. sale of what is in the womb of the animal). Under this heading, hereports the Hadith forbidding the Habal-al-Hablah and trading by “Mulamasah” (sale bytouching) and “Munabadhah” (e.g. bartering items without inspection). Al ’Ayny, in hisSharah on Bukhari, has explained why the reference to Gharar is contained only in theheading of a chapter, which does not include a Hadith on Gharar as such. He says that theHadith forbids the Habal-al-Hablah sale, which is a form of Gharar. Thus, Imam Bukharirefers to the multiple forms of Gharar, of which he has singled out “Habal-al-Hablah”, adevice by which a particular item refers to all items of similar description. 34 From this, thejurists derive the general legal principle that a contract must not be doubtful and uncertainas far as the rights and obligations of the parties are concerned, otherwise it would betantamount to deceiving any of the parties. The object of the contract must be preciselydetermined, price and terms must be clear and known (Ma‘lum). This is generally true of allobjects which can be measured, counted or weighed and which are subject to the prohibitionof Riba.According to Sharī´ah scholars, to become prohibited, a hazard or uncertainty would bemajor and remunerative, e.g. when involved in sale contracts it should affect the principalaspects of the contract, and it may not be the need of any valid contract like that of Salamand Istisna‘a. Gharar can be avoided if some standards of certainty are met, such as in thecase of Salam, where a number of conditions are required to be fulfilled. The vendor mustbe able to deliver the commodity to the purchaser. Therefore, Salam cannot be conductedin respect of those goods that are normally not available in the market at the stipulated timeof delivery. It is prohibited to sell any undeliverable goods. The commodity must be clearlyknown and its quantity must be determined to the contracting parties.As indicated above, Gharar relates more to “uncertainty” than to risk as used in commercialterminology. This uncertainty relates to the existence of the subject matter, rights of orbenefits to the parties and the consequences of the contract. Some jurists apply it to casesof doubtfulness, e.g. whether or not something will take place. This excludes “unknown”objects. 35 On the other hand, the Zahiri school of thought applies it only to the unknownto the exclusion of the “doubtful”. Thus, according to Ibn Hazm, Gharar in sales occurswhen the purchaser does not know what he has bought and the seller does not know whathe has sold. 36 However, the majority of jurists include both the unknown and the doubtfulto render a transaction Gharar-based and thus prohibited. In particular, the Malikites widenthe scope of Gharar on the basis of which eminent contemporary scholar Shaikh Al-Dhareerhas classified the principles covering Gharar under the following headings: 37I. Gharar in the terms and essence of the contract includes:(a) Two sales in one.(b) Downpayment (‘Arbūn) sale.(c) “pebble”, “touch” and “toss” sales. 3834 Al-Ayny, n.d.35 Al-Dhareer, 1997, p. 10; cf Ibn Abideen, n.d., iv/147.36 Ibn Hazn, 1988, 8, pp. 343, 389, 439.37 Al-Dhareer, 1997, pp. 10, 11.38 Referring to selling the lot of cloth upon which the stone thrown will fall ( Bai‘ al Hasat) or clothes with unspecified quality ofcloth, size and design.