Uncertainty in contracts from the perspective of islamic law – contemporary implications

Abstract

A few Quranic verses implicitly prohibit uncertainty in contracts, while hadith texts explicitly prohibit it. The analysis of primary sources of Islamic law and the views of eminent scholars show that uncertainty in contracts is tolerated in situations where there is a need for the contract and where the potential harm from the risks and uncertainties in the contract is negligible compared to the interest achieved by it. This paper defines uncertainty in linguistic and terminological terms, presents arguments for the prohibition of uncertainty, highlights the specificities that render a contract prohibited due to uncertainty, elaborates on the situations in which uncertainty in contracts is tolerated, and provides practical, contemporary examples. Keywords: uncertainty, risk, unknown, contract, insurance