What is gharar in Islam?

What the word means

Gharar comes from an Arabic root linked to deception and danger. In finance it means a contract where something essential is unknown or out of anyone's control: the item, its quality, the price or the delivery. The Prophet ﷺ forbade "the sale of gharar" along with a pebble-throwing sale where the item was picked by chance (Sahih Muslim 1513). Together with riba (interest) and maysir (gambling), gharar is one of the three big "no's" of Islamic finance. See What is riba in Islam?

Why Islam forbids it

The goal is fairness and goodwill. Wealth should change hands through real trade that both people understand and agree to:

You can't truly consent to something you can't see or measure. When one side wins and the other loses purely by chance, it begins to look like gambling.

Classic and modern examples

• Classic: selling fish still in the sea, birds in the sky, the unborn calf of a cow, or fruit before it has started to ripen.
• Modern: mystery boxes and loot boxes where you pay without knowing what you'll get, many derivatives and options traded for speculation, and conventional insurance in the view of many scholars.
• Hidden terms: contracts with vague prices, unclear fees or "we'll decide later" conditions.

Scholars apply this to modern products in different ways. For example, see Is car insurance haram? and Is day trading haram?

Minor uncertainty is okay

Scholars of all four schools (Hanafi, Maliki, Shafi'i, Hanbali) agree that small uncertainty is excused, because almost no deal is perfectly certain. Buying a house without seeing inside the foundations, paying a gym membership without knowing how often you'll go, or buying a watermelon without cutting it open are all fine. The question is whether the uncertainty is major, central to the deal, and avoidable.