What is meant by gharar?
Gharar refers to acts and conditions in exchange contracts, the full implications of which are not clearly known to the parties. This is something very similar to asymmetric information. There are two kinds of gharar: Gharar fahish (substantial) and gharar yasir (trivial). The first kind is prohibited in Islam while the second is tolerated since this may be unavoidable without causing considerable damage to one of the parties. In many cases, it is simply not possible to reveal all information; not because the seller wants to hide anything, but because it is in the nature of the subject matter of the contract. Islamic jurisprudence relies on the general condition of trustworthiness of contracting parties to take care of this.
