Gharar
In one sentenceExcessive ambiguity or uncertainty in the subject of a contract, its price or its delivery date, such that one party does not know what it will receive.
Simply put
A contract requires both parties to know what is sold, for how much and when it is delivered. Minor gharar, which no dealing is free of, is tolerated, but excessive gharar invalidates the contract.
That is why Islamic finance contracts define the goods precisely, the Murabaha price is known from the start, and Salam specifications and delivery dates are set. For the accountant: clear terms also make measurement and recognition easier.
Example
Selling a farm's crop that has not yet appeared for a lump-sum price, without specifying its quantity or description, involves gharar, because the buyer may receive a lot or nothing. Selling it on Salam with a specified quantity, description and date removes this uncertainty.
Don't confuse it with
RibaRiba is a prohibited increase on a debt or in exchanging riba-bearing items, while gharar is uncertainty in the contract itself.