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Glossary

Gharar

Excessive uncertainty

Excessive uncertainty or ambiguity in a contract's essential terms, which Shariah requires to be avoided.

Gharar refers to avoidable uncertainty about the essential elements of a contract — for example, ambiguity about price, subject matter, or each party's rights and obligations.

Clear, well-documented terms reduce gharar. Defining the capital, the profit-sharing ratio, the term, and each party's role up front — and signing against a fixed record — is part of structuring a contract soundly.

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