The document discusses various types of contracts that contain gharar (uncertainty) which are prohibited in Islamic law. These include twin sales where the sale of one item is contingent on the sale of another; twin contracts where two different contracts are combined; bai urboon where the buyer has the option to forfeit a deposit or complete the purchase; and forward contracts where delivery is at a future date creating uncertainty. Classic contracts of gharar from early times involved random selection that turned trade into gambling. Contingent contracts where the sale depends on an uncertain future event also contain impermissible gharar.

1. Gharar in the ContractGharar in the Contract
Gharar in the Contract; means that the
contract is transacted in such a manner that
renders it uncertain.
e.g.:
Ahmed sells his house to Bashir on the
precondition that Qassim sells his house to
Ahmed.

2. Baitan fi Bai (Twin Sales):Baitan fi Bai (Twin Sales):
 Abu Huraira (R.A) narrates that the Holy Prophet
(PBUH) has disallowed two sales in one sale.
The scholars and commentators, in the light of the
above Hadith, have explained that twin sales
means that:
 i) In a single contract of sale the buyer has been
given two different prices of cash and credit
payment.
e.g.: the well known pricing of 2/10, n/30.
 ii) Another sale is made a precondition for this
sale.

3. Safaqa fi Safaqa (Twin Contracts):Safaqa fi Safaqa (Twin Contracts):
Safaqa means a contract. The Holy Prophet like
twin sales has also disallowed twin contracts.
According to the above referred Hadith combining
any two contract in one contract that are
disallowed in Shariah or that can lead to charging
of Riba.
e.g.:
i) Loan & Gift
ii) Loan & Lease (Ijara)
iii) Loan & Sale (Bai)

4. Bai Urban / UrboonBai Urban / Urboon
A sale, with partial payment of the price being
made upfront, if the balance is paid by the due
date the sale becomes effective failing which the
advance payment is forfeited and the sales
contract is annulled.
In the above arrangement the buyer has the
right/option to pay the balance of the sale price
and take the goods or forego the advance paid
where as the seller is bound to honor the contract
if the balance is paid.
Majority of Shariah scholars have reservations of
the permissibility of Bai Urboon; whereas Imam
Ahmed (RA) considers it permissible.

5. Urboon vs. OptionUrboon vs. Option
 Option is right to buy or sell a fixed quantity of
commodity, currency, or security at a particular
date at particular price. The purchaser is not
obliged to buy or sell, he dose so if it is profitable.
 In option unlike the Urboon, sale of
commodity/asset is not exercised.
 The sum of urboon will become a part of price
later if the purchaser takes possession of the
goods. Whereas the option money is not the part
of the exercised price.

6. Sales that resemble but areSales that resemble but are
not Bai Urboon:not Bai Urboon:
The buyer pays partial advance of the price.
However, in case the balance is not paid the
sale contract is annulled and the advance is
returned to the buyer.
Once the sale has been executed, the buyer
returns the goods to the seller along with
some compensation.

7. Some Classic Contracts ofSome Classic Contracts of
Gharar:Gharar: In the dark ages, many contracts were in vogue,
where that condition would turn trade into treasure
hunt. Like the seller would have different pieces
of cloths and the buyer would cast a stone and
would get the cloth where the stone would land.
The Holy Prophet (PUBH) has disallowed all such
contracts.
 The reason for this prohibition is that Gharar in
such contracts reaches the proportions of Qimar.

8. Contingent ContractContingent Contract;;
Contingent Contract; means that a contract is
made contingent upon happening of some
uncertain event.
e.g.: Ahmed Sells his house to Bashir on the
condition that Qassim sells his house to Ahmed.
The reason for this prohibition is that there is
Gharar in the contract, as it is uncertain if the
event on which the sale is contingent will ever
happen.

9. Forward Contract:Forward Contract:
Where the offer and acceptance have been made.
However the contract would become effective on a
future date.
The element of Gharar is present in this contract
because the circumstances when the contract
would take effect are not known. It is equally
possible that at such date the price becomes
irrelevant or the seller may not be able to deliver
the goods.

10. Forward Contract:Forward Contract:
Where the offer and acceptance have been made.
However the contract would become effective on a
future date.
The element of Gharar is present in this contract
because the circumstances when the contract
would take effect are not known. It is equally
possible that at such date the price becomes
irrelevant or the seller may not be able to deliver
the goods.