A challenge is any event where there is a chance of the character failing. All challenges are resolved by dharma combat.
Dharma combat begins when a PC announces whether he is going to "raise" or "lower" the dharma number, and activates one of his dharma techniques. After he has announced this, the DM picks the "dharma number" for the challenge and tells the players what it is.
The point of dharma combat is to either raise or lower the dharma number until it is either "-15" or "15". Characters raise and lower the dharma number by using dharma techniques. Awake characters want to raise the number to 15, Ignorant characters want to lower it to -15. An Awake character who pushes the number to 15 immediately wins the dharma combat. This means that the situation resolves favourably for him. Techniques that would raise the dharma number above 15 raise it to 15 instead. An Ignorant character who pushes the number to -15 immediately wins. Techniques that would lower the dharma number below -15 lower it to -15 instead.
When two Awakened characters are conducting dharma combat with one another, both may win when one of them raises the number to 15. The situation resolves so that both benefit in some way (though the resolution may favour the character who won more than the other). When two Ignorant characters conduct dharma combat with one another, whoever lowers the number to -15 first wins.
The Dharma Number:
The starting dharma number is between -14 and 14, depending upon how challenging the DM wants to make the dharma combat. If a dharma combat is supposed to be easy for an Awakened character, the number should start either above 1, whichever would make it nearer to the number the character is trying to attain. If the dharma combat is more difficult, it should start further away from the number the character is trying to attain. If it's unclear what the difficulty should be, the starting number should be 0.
Order of Participants:
Any number of characters may participate in the same dharma combat. Whoever starts dharma combat by using a dharma technique goes first. The character with the most attainments and attachments combined goes next, and the other characters take turns in descending order, with characters with more attachments and attainments combined going before characters with fewer. When every character has gone, the turn is over, and a new turn begins, with the order repeating, including the character who started the dharma combat going first. Dharma techniques may change the order that characters go in. The effects of these last the entire dharma combat.
When multiple characters are involved, Awake and Ignorant characters may be working together. In that case, their players must decide whether they will try to win by raising or lowering the number. They must do this before the DM tells them what the dharma number is for the combat. An Awake character who participates in three challenges where he works to resolve a challenge by "pushing" the number to -15 gets an attachment. An Ignorant character who participates in three challenges which he works to resolve by pushing to 15 gets an attainment. The characters do not need to win the dharma combat for it to count as one of the three.
A character may use any dharma technique he has the correct attainments or attachments for. Once it is used, an attainment or attachment is "closed" and is unable to be used until it is "opened". Some dharma techniques "close" other attainments or attachments, either on the character or on another character. A character with a "closed" attachment or attainment may not use dharma techniques he gains access to through that attachment or attainment. If a character gains access to a dharma technique through more than one attainment or attachment, he may use that technique so long as one of them is still "open".
Sample Dharma Techniques:
Look to the Righteous (Right Speech) - the character refers to the conduct of the righteous followers of dharma. This shames the Ignorant and chastises the Awake. He may quote a famous saying, mention an incident from the biography of a Boddhisattva or Buddha, describe how one steps onto the eightfold path, or lead by example. +2 to the dharma number and the character is one higher in the order starting next turn.
Skillful Means (Right Mindfulness) - the character realises his opponent's actions will lead to the outcome the character desires without the opponent realising it. The character picks one of his opponents and increases the dharma number by the number of attachments that opponent has.
Violence (Hatred) - the character uses violent force to accomplish his goals. -3 to the dharma number. If Violence lowers the dharma number to -15, he may choose one of his opponents. That character dies.
Description of Dharma Techniques:
A PC is expected to explain how a particular dharma technique is relevant, and how his character performs it. The GM may rule it is unusable if the explanation the player gives is particularly poor. Similarly, if all players other than the GM agree that the explanation of how an NPC uses a dharma technique is poor or nonsensical, the GM must use another dharma technique. The players, including the GM, are encouraged to help one another in situations where it may be difficult to conceive of how a given dharma technique is relevant or sensible.
Challenges Against Passive Objects or Abstract Problems:
The rules refer to an opponent, but passive objects may also present challenges. In the world of Dharma: the RPG, passive objects like mountains and abstract problems like a city's poverty have attainments and attachments just like people do. Individual GMs may choose to interpret this as actual volition (i.e. the spirit of the mountain resists the PC, stealing his provisions), mechanical representations of abstract qualities (i.e. a society may be impoverished because it Scorns and Hates the poor), or anagogical / spiritual challenges the PCs must overcome (Picking the lock is frustrating - the PC might become distracted [Intoxicated]). GMs are encouraged to use any and all of these explanations in games as necessary. Remember, it is the GM's responsibility to make sure that the explanation of the dharma technique the passive object "uses" makes sense.