gharar

International, USA

Uncertainty.

The principles of Sharia require that the fundamental terms of a contract (for example, subject matter, price and time of delivery or date of performance) be certain at the time the contract is executed. Because of the prohibition against gharar, several conventional finance products or techniques may not be acceptable in Islamic finance (for example, derivatives and traditional insurance products). However, Islamic scholars and derivatives experts have been working to develop derivatives products that comply with Sharia principles. The International Swaps and Derivatives Association, Inc. (ISDA), in conjunction with the Bahrain-based International Islamic Financial Market, is working on a Sharia-compliant ISDA Master Agreement which is expected to be published in December 2009 or early 2010.