A contract (aqd) that is contingent upon the occurrence of an event whose result or monetary effect is unknown as to both profit and loss. Such a contract may expose one party (the one with asymmetric information) to price risk or excessive uncertainty (known in Islamic finance as excessive gharar). Gharar may arise from various sources such as asymmetry of information, concealment of defects, fraud, manipulation, unaccounted-for risk, uncertainty, ignorance (asymmetry of information), etc. Aleatory contracts, according to shari’a, may also involve the sale of an underlying that is not available with the seller, or the sale whose outcome is not known.
Examples include selling fish in water or birds in air. In modern financial transactions, short sale or buying on margin are impermissible by shari’a as such transactions involve excessive uncertainty and an element of speculation.
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