LAW 737 ISLAMIC LAW OF TRANSACTIONS

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LAW 737 ISLAMIC LAW OF TRANSACTIONS

• QUESTION 9
• GHARAR - THE DIFFERENT VIEW OF JURISTS
• PRESENT BY
• MUNA FARHANA BT. HALIM
• NORHANISAH BT. JOHAR
• NUR LIYANA BT. MOHD. ANUAR

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INTRODUCTION

• The prophet prohibited the pebble sale and the
  gharar sale
• Abu Hurayra
• What is Gharar?
• Gharar has many definitions which can be
  summarised under 4 headings-
• - Hanafi and Shafie
• - Zahiri
• - Most Jurists (Jumhur)
• - Al-Sarakhsi

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• Hanafi and Shafie
• - Gharar means doubtfulness or uncertainty.
• - Ibn Abidin defines Gharar as uncertainty
  over the existence of the subject matter of
  sale.
• Zahiri
• - Gharar means ignorance.
• - Ibn Hazm defines Gharar in sale occurs when
  the purchaser does not know what he has bought
  and the seller does not know what he has sold

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• Most Jurists (Major)
• - means combination of both ignorance and
  uncertainty.
• - accepted by the majority (Jumhur).
• Al-Sarakhsi
• - defines Gharar in contract or transaction
  occur when the consequences are concealed or
  unknown to the contracting parties.

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• Gharar occurred when-
• The consequences are totally concealed.
• 2) The probability of existence is equal to
  the probability of non-existence.
• 3) The non-existence of the subject matter
  outweighs its existence

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Prohibition of Gharar

• Reliable sources have reported through a number
  of the Prophets companions that the Prophet
  (S.A.W) has forbidden Gharar in trading.
• The Hadith is considered as one of the cardinal
  principles of sale's law and the groundnorm of
  all rules governing Gharar contract.
• Muslim Jurists agree that excessive Gharar is
  prohibited as it impairs the validity of the
  contract.

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Types of Gharar

• Gharar is divided into two namely
• (i) Gharar saghir - minor or slight gharar.
• (ii) Gharar kabir -major or excessive
  gharar.
• The gharar that causes a contract to be invalid
  is major gharar.
• In general terms major or excessive gharar is
• - an uncertainty which is so great that it
  becomes unacceptable, or
• - it is so vague that there is no means of
  quantifying it.

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• More specifically excessive gharar arises out of
  one of the following
• - Asset or merchandise does not exist.
• - Asset or merchandise cannot be delivered.
• - Asset or merchandise is not according to
  specifications.

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Prohibition of Gharar

• The examples agreed upon excessive Gharar
• 1. The Pebble touch and toss sale.
• 2. Selling the unborn animal without its
  mother.
• 3. Selling the fetuses and embryos.
• 4. Selling fruit before its emergence.
• 5. Selling the find of the diver in advance.
• 6. Selling the unborn animal (Habal-al-Habalah).
• 7. Selling the object of unknown identity
  without the buyer having the right to specify
  it.
• 8. Selling an object of unknown genus.
• 9. Deferment of the price to an unknown future
  date.

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GHARAR AND THE INVALIDITY OF A CONTRACT

• Gharar in a contract can refer to
• (i) uncertainty towards the existence of the
  subject matter. (ii) uncertainty towards
  the possession/ ownership of the subject
  matter. (iii) uncertainty towards the price.
• (iv) uncertainty towards the payment of the
  price.
• (v) ignorance (jahalah).

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• THE VIEW OF ISLAMIC JURISTS
• PAST AND PRESENT

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VIEW OF PAST ISLAMIC JURISTS

• HANAFI SCHOOL
• - AI-Sarakhsi - Gharar as something with
  unknown
• consequences.
• - AI-Kasani - Gharar that refers to
  suspicion. Gharar is the
• potential risk faced
  by a person, with a 50
• possibility that the
  goods mayor may not
• eventually exist
  (syak). To AI-Khasani, gharar
• is the suspicion that
  a good may not exist.

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• For the Hanafi mazhab, such a trade is lawful
  because the buyer is given the right to make a
  choice after he has viewed the goods. This view
  is based on the Prophet s.a.w. hadith ??
  ????? ???? ?? ??? ??? ??????? ??? ???
  Meaning "Whosoever buys something that
  has not been viewed, he has khiyar (choice to buy
  or reject) after viewing it".

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• SYAFIE SCHOOL
• - Gharar as khatar (of high risks).
• AI-Shirazi - Gharar as something whose
  condition
• and consequence
  are unknown.
• AI-Ramli - Gharar is something that has
  two
• assumptions, positive
  and negative, with the
  negative being bigger.
• AI-Sharqawi and AI-Qalyubi -
• Gharar as something whose consequence is
  unknown and has two assumptions, positive and
  negative, the negative outweighing the
  positive.

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• ZAHIRI SCHOOL
• Gharar also means ignorance and this can be when
  the subject matter of sale is unknown. This view
  is adopted by the Zahiri School alone.
• - Ibn Hazm
• Gharar in sale occurs when the purchaser does
  not know what he has bought and the seller does
  not know what he has sold.

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VIEW OF PRESENT ISLAMIC JURISTS

• MUSTAFA AL-ZARQA'
• - Gharar is a fraud through words or deeds
  to attract someone to perform aqd.
• - Divided Gharar into 2 forms-
• i) Gharar Qauli
• ii) Gharar Fi'li

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VIEW OF PRESENT ISLAMIC JURISTS

• - Gharar qauli
• a fraud committed verbally by a seller relating
  to price and method. For example, a seller says
  to a buyer "The same product can be found
  elsewhere but we offer the lowest price." These
  words attract a buyer to perform 'aqd with the
  seller.

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VIEW OF PRESENT ISLAMIC JURISTS

• - Gharar fili
• a fraud committed by a seller relating to the
  features of the product, by his action. For
  example, a shepherd who wants to make his goat
  saleable by displaying a l arge pouch of milk.
  This would attract the buyer to assume the goat
  produces a lot of milk when it does not.

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VIEW OF PRESENT ISLAMIC JURISTS

• MUHAMMAD BELTAJI
• - It is impossible for the buyer and
  seller to avoid gharar completely.
• - 3 requirements in declaring something as
  gharar that can be excused
• i. The gharar is minor and small.
• ii. Such trading is needed by society.
• iii. The gharar cannot be avoided
  without masyaqqah(hardship) that is recognised
• by Syara'.

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THE EXTENT OF PERMISSIBLE GHARAR

• Gharar is prohibited by the law but to certain
  extent,it is permissible.
• Some of the examples to show that it is
  permissible under minor gharar such as-
• Salam
• Ijara
• Juala
• Shirka
• Mudaraba
• Bay al-Istisna

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Permissible Gharar

• Salam
• - a sale contract where delivery is delayed
  until a prefixed future time.
• - Believers! When you contract a debt for a
  fixed period put it in writing
  (Al-Baqarah282)
• - prefixing the future date of delivery will
  render the contract to be valid.

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Permissible Gharar

• Ijara
• - a contract of hire or lease for a service or
  for a use of certain moveable and immoveable
  property for a consideration.
• - "... one of the girls said father! take this
  man into your service (ista 'jir-hu), men who
  are strong and honest are the best that one can
  hire (khayra man ista'jar-ta). (Al-Qasas 26)

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Permissible Gharar

• Ju 'ala
• - a contract for a reward made to the world at
  large for returning of a lost property.
• - This contract is risky and uncertainty because
  the reward is not paid to the offeree until the
  work is completed, the nature of the work is
  not certain and precise and no condition of
  pre-payment is permitted.
• - they said we have lost the kings cup, and
  he who brings it shall have a camel-load...
• (Surah Al-Yusuf72 )

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Permissible Gharar

• Shirka
• - A contract of partnership to engage in
  trading or enterprise in the view of sharing
  the profit secured from the trading or
  enterprise.
• - Because of the amount of profit and the
  nature of presentation and surety ship are not
  precisely known causing the contract containing
  the element of gharar.
• - "they (the heirs) are the sharers (shuraka')
  of one third.
• (Al-Imran24)

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Permissible Gharar

• Mudaraba
• - the capital is the combination between cash
  and effort.
• - the contract is void because the work done by
  the entrepreneur is not precise and the profit
  is not guaranteed and unknown.
• - In order to make this contract effective the
  capital and the distribution of profit must be
  made certain.

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Permissible Gharar

• Bay' al-istisna'
• - a contract to manufacture, where a customer
  will place an order to an artisan to make a
  specific kind of article like shoes, furniture,
  and the like for a price paid in full or none at
  the inception of the contract.
• - contract of a nonexistent void
• - This contract was allowed because the people
  are in the extreme need of it.

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CONCLUSION

• Ibn Juzain stated that-
• - gharar is prohibited by the hadith and sunnah.
• - it must be avoided as it render the gharar in
  contract as null and void.
• - unless gharar is very minor gharar, it is
  tolarable.

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CONCLUSION

• Form of gharar or uncertainty prohibited in the
  Islamic is a vindication of the viability and
  infallibility of the Islamic injunctions that are
  derived from the Holy Quran and the Tradition of
  the Prophet.
• But to the certain extent, it is permissible
  under the Islamic law as if it is a minor gharar.
  

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• This is a kind of reminder that Man needs the
  guidance of his creator as he fulfils his role as
  a vicegerent of God on earth and without this
  guidance he is always subject to being lead a
  stray by his whims and desires or the limitation
  of his mind and experiences as attested to by the
  many failures of our time in all spheres of
  life.
• Thank you.