What are the prohibited elements in Islamic transactions?

The main practices that are prohibited are usury, ambiguity in contracts (gharar), gambling and games of chance (maysir), fraud, bribery, the use of false weights and measures, taking others’ property unlawfully, and transactions on prohibited (haram) things.

What is the wisdom behind the prohibition of gharar?

The rationale for the Prohibition of gharar is to ensure full consent and satisfaction of the parties in a contract. Without full consent, a contract may not be valid. Full consent can only be achieved through certainty, full knowledge, full disclosure and transparency.

What is the fourth pillar of Islam?

Sawm, fasting during the holy month of Ramadan, is the fourth pillar of Islam. Ordained in the Holy Qur’an, the fast is an act of deep personal worship in which Muslims seek a richer perception of God. Fasting is also an exercise in self-control whereby one’s sensitivity is heightened to the sufferings of the poor.

What is Bay Al Tawarruq?

As a financial term, bay’ al-tawarruq refers to muamalah business transactions which involve two stages of business. In its first stage, business is conducted where a purchase on credit is made between the buyer and the original seller of an asset.

What are the types of riba?

There are two principal forms of riba. Most prevalent is the interest or other increase on a loan of cash, which is known as riba an-nasiya. Most Islamic jurists hold there is another type of riba, which is the simultaneous exchange of unequal quantities or qualities of a given commodity. This is known riba al-fadl.

What is Fasid contract?

Fasid Contracts: A fasid contract is a unique class of contract recognized in the HanafÊ School’s categorization scheme. Unlike a batil contract, the essential elements of a fasid are present, but the contract is tainted by a defect in an accessory attribute (Mahmud, 2000, 8:139).

What is an example of gharar?

Gharar can arise when the claim of ownership is unclear or suspicious. Examples of gharar in modern finance include futures and options contracts, which have dates of delivery in the future.

What is gharar and maysir?

Gharar (Arabic: غرر) literally means uncertainty, hazard, chance or risk. It is a negative element in mu’amalat fiqh (transactional Islamic jurisprudence), like riba (usury) and maysir (gambling).