Issues of Gharar
Issues of Gharar.
Discuss the issue of gharar in financial transactions.
Gharar is most significant element in financial contracts1 and also prohibited elements in Islamic financial transaction. Gharar means uncertainty about the subject matter2. In other words, gharar also can be defined as any uncertainty created by the lack of information in a contract. Issue of gharar in financial transactions: Conventional Insurance
For example, in conventional insurance, the policyholder enters in general insurance contract. The policyholder will pay the premium until the end of contract period. The policyholder has to bear the losses of the amount given as premium if the event of insurance does not happen. The issue of gharar here is when the insurer which is insurance company does not recognize how much he will owe the insured. Normally, the insured which is policyholder also does not recognize how much he will pay eventually to the insurer.
Moreover, issue of gharar also happened in life policies when a policyholder totally losses all premiums that he/she has paid if he/she terminates his/her policy within the first two or three years of the contract.
Furthermore, the issue of gharar involved when the policyholder gets back the premiums along with interest in the case of survival and the insured amount in the case of death before maturity of the policy.
Issue of gharar in financial transaction: Selling and Buying
In selling and buying transaction, the issue of gharar will happen if the subject matter of the legal transaction does not exist. Besides, it also can happen in the situation of the subject matter of legal transaction is exist but it not in possession of the seller. Last but not least, the issue of gharar will occur in the transaction when changing the subject matter on the basis of uncertain delivery and payment.
Discuss the issue of gharar in financial transactions.
Gharar is most significant element in financial contracts1 and also prohibited elements in Islamic financial transaction. Gharar means uncertainty about the subject matter2. In other words, gharar also can be defined as any uncertainty created by the lack of information in a contract. Issue of gharar in financial transactions: Conventional Insurance
For example, in conventional insurance, the policyholder enters in general insurance contract. The policyholder will pay the premium until the end of contract period. The policyholder has to bear the losses of the amount given as premium if the event of insurance does not happen. The issue of gharar here is when the insurer which is insurance company does not recognize how much he will owe the insured. Normally, the insured which is policyholder also does not recognize how much he will pay eventually to the insurer.
Moreover, issue of gharar also happened in life policies when a policyholder totally losses all premiums that he/she has paid if he/she terminates his/her policy within the first two or three years of the contract.
Furthermore, the issue of gharar involved when the policyholder gets back the premiums along with interest in the case of survival and the insured amount in the case of death before maturity of the policy.
Issue of gharar in financial transaction: Selling and Buying
In selling and buying transaction, the issue of gharar will happen if the subject matter of the legal transaction does not exist. Besides, it also can happen in the situation of the subject matter of legal transaction is exist but it not in possession of the seller. Last but not least, the issue of gharar will occur in the transaction when changing the subject matter on the basis of uncertain delivery and payment.