Islamic Ruling

On Deception, Uncertainty and Gharar

In this article I will attempt to define what gharar is and what it is not.
Broadly speaking, the prohibition of gharar has a clear implication: don’t deceive.
More specifically, deception in a sale can arise one of two ways:

Murabaha: Halal or Haram?

Islamic banks that use this product claim it’s not interest because the amount that Adam owes is fixed and does not increase if he is delinquent on payments. Therefore, we are simply looking at a standard sale wherein a trader buys an item for one price and sells it for an increased price.
Put differently, the argument for Murabaha is:
Does Islam allow someone to buy a car for $10,000 and sell it for $12,000? Yes.
Does Islam allow someone to make a purchase on a deferred payment basis? Yes.
From 1 and 2, neither the bank nor Adam has done anything wrong and Murabaha is permissible in Islam.
Not so fast.