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Islamic Finance


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Jahalah


Arabic (جهالة) for the lack of knowledge about the specifics of an object, event, or action, in spit of knowledge about its occurrence. For example, from a Hanafi perspective, if the object of sale or price (thaman) is associated with major ignorance, leading to dispute (munaza’ah) between the parties to the contract, then the sale is defective (ba’i fasid). In general, the terms “gharar” and “jahalah” are often used by scholars to define uncertainty in commutative contracts. The sale of tree fruits before they ripen is a typical example of gharar and jahalah. In terms of magnitude, jahalah can be divided into: jahalah fahishah (major ignorance) and jahalah yaseerah (minor ignorance). In turn, jahalah fahishah is classified by jurists into four general categories: (1) ignorance of the object of sale, (2) ignorance of the price, (3) ignorance regarding the contract duration, and (4) ignorance regarding the means of contract formulation (i.e., recording).

Shari’a only excuses minor ignorance that doesn’t potentially lead to dispute between contracting parties. Major ignorance is, thus, prohibited and renders contracts void or defective.


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