Gharar is an element of risk, uncertainty, or hazard that could render a contract void. A gharar-associated contract is one that contains a degree of risk on the part of any of the counterparties in a way that could lead to him losing part or all of some countervalue, right, etc. Gharar was defined by some shari’a scholars (namely Ibn al-Qayyim) as “a sale in which the vendor is not in a position to hand over the subject matter to the buyer, whether the subject matter is in existence or not”. According to its degree (amount), gharar is typically classified as minor gharar, mild gharar, and major gharar:

• Minor gharar: a small amount of gharar (in Arabic gharar yaseer) that can not be avoided due to the nature of the subject matter. This degree of gharar doesn’t cause considerable damage or losses to one of the counterparties. As such, it doesn’t affect the validity of the contract, i.e., it is typically tolerable under shari’a.
• Mild gharar: an amount of gharar that is neither small nor large. This degree of gharar is higher than minor gharar and lower than major gharar. It may- or may not- render a contract void, depending on the case at hand.
• Excessive/ major gharar: a large amount of gharar (in Arabic gharar fahish) that renders the contract void. This gharar relates to important and material information about the contract or its subject matter.

Characteristically, gharar affects commutative contracts (exchange-based contracts) and not gratuity contracts (noncommutative contracts). This is because the former constitutes a bilateral contract which requires that parties thereto possess an exact knowledge of the underlying object and the contract elements in order to establish legal consent, while the latter is one-sided and doesn’t require such exact knowledge because the consent of the recipient is not obligatory (it is unnecessary in gratuity contracts that the recipient gives his consent for the contract to consummate). Therefore, excessive gharar has nothing to do with the contract validity in this type of contractual dealings.