Guaranteed Low Prices and Interest: Difference between revisions

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#Generally it is forbidden to sell something for cheaper when the buyer pays in advance.<ref>Shulchan Aruch Y.D. 173:7</ref>
#Generally it is forbidden to sell something for cheaper when the buyer pays in advance.<ref>Shulchan Aruch Y.D. 173:7</ref>
# If the seller has the entire quantity of the product that he is selling and the buyer is prepaying it is permitted to charge a lower price for the commodity.<ref>Shulchan Aruch Y.D. 173:7</ref>
# If the seller has the entire quantity of the product that he is selling and the buyer is prepaying it is permitted to charge a lower price for the commodity.<ref>Shulchan Aruch Y.D. 173:7</ref>
# If there is no fixed price in the market for an item it is permitted to pay for it in advance and have it delivered later.<ref>Gemara Bava Metsia 65a, Tosfot 63b, Rama 173:7</ref><ref>Rama 173:7 says you can do poskin on parah or talit even ein lo. That’s based on Tosfot 63b s.v. vamar that says if there’s no shuma then we’re not calling it agar natar we’re calling it tarsha. But what about the fact it might go up on its own like poskin al hapeirot?
# If there is no fixed price in the market for an item it is permitted to pay for it in advance and have it delivered later.<ref>Gemara Bava Metsia 65a, Tosfot b"m 63b s.v. vamar, Rama 173:7</ref><ref>Rama 173:7 says you can do poskin on parah or talit even ein lo. That’s based on Tosfot 63b s.v. vamar that says if there’s no shuma then we’re not calling it agar natar we’re calling it tarsha. But what about the fact it might go up on its own like poskin al hapeirot?
* Bear Hagolah 173:18 and Tiferet Lmoshe on Shach 173:18 answer that fruit will have a market price if not now then at some later point, but a cow will never. Bear Hagolah and Tiferet Lmoshe are slightly different. Bear Hagolah says that there's no concern it'll go up in price because the seller can give the buyer a slightly cheaper cow. However, the Tiferet Lmoshe says that there's no concern it'll go up in price since the price isn't establish it never appears as interest. Chida in Birkei Yosef 173 sides with the Bear Hagolah. This approach is supported by many achronim including Shaar Deah 8, Chachmat Adam 139:4, Or Same'ach b"m 64a s.v. bs"a, Avnei Nezer YD 210:4, and Bet Meir on Taz 173:12 cited by Mesivta Yalkut Biurim b"m 63b p. 60.
* Bear Hagolah 173:18 and Tiferet Lmoshe on Shach 173:18 answer that fruit will have a market price if not now then at some later point, but a cow will never. Bear Hagolah and Tiferet Lmoshe are slightly different. Bear Hagolah says that there's no concern it'll go up in price because the seller can give the buyer a slightly cheaper cow. Chelkat Binyamin fnt. 173:349 thinks that this reasoning of the Bear Hagolah isn't precise. However, the Tiferet Lmoshe says that there's no concern it'll go up in price since the price isn't establish it never appears as interest. Chida in Birkei Yosef 173 sides with the Bear Hagolah. This approach is supported by many achronim including Shaar Deah 8, Chachmat Adam 139:4, Or Same'ach b"m 64a s.v. bs"a, Avnei Nezer YD 210:4, and Bet Meir on Taz 173:12 cited by Mesivta Yalkut Biurim b"m 63b p. 60.
* Shach 173:17 answers that parah is yatzah shaar in that the factors necessary to determine its price like per pound is shaar kavuah
* Shach 173:17 answers that parah is yatzah shaar in that the factors necessary to determine its price like per pound is shaar kavuah
* Taz 173:12 argues on rama and says its only if it didn’t go up.
* Taz 173:12 argues on rama and says its only if it didn’t go up.
* Chavot Daat 173:11 there’s no shiybud haguf here if you give them a specific item, but there is for the general fruit which you can give them any fruit.
* Chavot Daat 173:11 there’s no shiybud haguf here if you give them a specific item, but there is for the general fruit which you can give them any fruit.
* Rav Chaim (on shas n. 75 cited by Mesivta Yalkut Mefarshim b"m 63b p. 60 explains that once the commodity is promised to the supplied even though he doesn't own it it is partially yesh lo and we're not concerned about the price fluctuation.</ref>
* Rav Chaim (on shas n. 75 cited by Mesivta Yalkut Mefarshim b"m 63b p. 60) explains that once the commodity is promised to the supplied even though he doesn't own it it is partially yesh lo and we're not concerned about the price fluctuation.
* Chelkat Binyamin 173:108 concludes that one can be lenient like the Bear Hagolah's approach and generally give a prepayment to receive more if the price of the item isn't readily determined and isn't going to become readily determined by people.</ref>
# It is forbidden for the perspective lender to counter the request of a loan with a subterfuge of having the lender borrow a commodity to then resell it to the lender for a cheaper price. Since the borrower originally requested a loan the borrower may not sell the commodity for a cheaper price when when the price is unclear in the marketplace.<ref>Taz 163:6</ref>
# It is forbidden for the perspective lender to counter the request of a loan with a subterfuge of having the lender borrow a commodity to then resell it to the lender for a cheaper price. Since the borrower originally requested a loan the borrower may not sell the commodity for a cheaper price when when the price is unclear in the marketplace.<ref>Taz 163:6</ref>
# If the buyer's intention is purely to buy the item on credit in order to sell it immediately for a cheaper value that is considered a prohibited since it as though the cheaper price is stipulated as the value of the loan and yet he agreed to repay a higher amount.<ref>The Ritva b"m 65a cited by Bedek Habayit 173 writes that if someone purchases a commodity on credit it is permitted if the price isn't clear. However, if the buyer immediately sells it for less it shows that the loan obligated him to pay more than the value of the item and is interest. Chatom Sofer YD 137 follows the Ritva and writes that one can't bring a proof from Shulchan Aruch 163:3 or Taz 163:6 who imply otherwise since they didn't have the Ritva.</ref>
# If the buyer's intention is purely to buy the item on credit in order to sell it immediately for a cheaper value that is considered a prohibited since it as though the cheaper price is stipulated as the value of the loan and yet he agreed to repay a higher amount.<ref>The Ritva b"m 65a cited by Bedek Habayit 173 writes that if someone purchases a commodity on credit it is permitted if the price isn't clear. However, if the buyer immediately sells it for less it shows that the loan obligated him to pay more than the value of the item and is interest. Chatom Sofer YD 137 follows the Ritva and writes that one can't bring a proof from Shulchan Aruch 163:3 or Taz 163:6 who imply otherwise since they didn't have the Ritva.</ref>

Revision as of 23:36, 12 May 2020

Discounts

  1. Usually it is considered a rabbinic prohibition of taking interest to have a two tiered system in which the buyer could either pay a lower price now and receive the merchandise or can get the merchandise now and only pay later but at a higher price. [1]
  2. It is common in some businesses to require a deposit when a customer places a sale to ensure that the seller follows through with the sale. It is permitted for the seller to charge a lower price to the buyer who makes a deposit since the seller’s intent in requiring a deposit isn’t to charge interest but to ensure that the sale takes place. [2]
  3. It is forbidden to pay a camp an early bird special or discounted price if you pay early.[3]
  4. It is forbidden to pay for a sefer in advance before the printer published the sefer.[4]
  5. Using advanced discounted payments for a yeshiva or non-profit tzedaka organization is permitted since this is only a rabbinic form of interest.[5]

Buying on Credit when the Price is Unclear

Tarsha - Buying on Credit

  1. Generally it is forbidden[6] to charge someone extra for buying on credit.[7]
  2. If an item doesn't have a fixed price then one can charge more for it when the buyer pays later than the delivery date. The reason is that since there's no established price the seller can set the price of the item at the higher price that the buyer will pay later. However, if there is a market price that is known[8] or the seller specifies a price for the item if one wanted to pay now and another price for buying on credit it is forbidden.[9] Therefore, having a two tiered pricing system for buying regularly and buying on credit is interest and forbidden between two Jews.[10]
    1. Even when there's no clear price, the market hasn't established a price, and the seller didn't specify a price, the seller can only increase the price a little. There is a dispute as to this amount:
    2. Some say that the seller can only raise it to an amount that one could expect the price to rise by the time of the payment date. For example, if it is known that in the rainy season the price of umbrellas rise, and the price of umbrellas weren't fixed in the market, then one could have someone pay the price of the rainy season even though the umbrellas were bought in the dry season and they were delivered then. One couldn't charge a higher rate that wouldn't be expected to be the price of the market. We are strict for this opinion.[11]
    3. An alternate opinion to the first one is that the seller can charge up to the price that the market sometimes surges to when some event occurs if that event happens on a frequent basis.[12]
    4. Some say that the seller can raise it up to 20 percent above the range of prices in the market. If this is a stringency we follow this opinion.[13]
  3. If something doesn't have a clear price and the market price fluctuates frequently even if there is currently a market price it is considered eligible for the leniency of charging more for buying on credit as long as the seller doesn't specify a price for purchasing it up front.[14]

Paying in Advance

  1. Generally it is forbidden to sell something for cheaper when the buyer pays in advance.[15]
  2. If the seller has the entire quantity of the product that he is selling and the buyer is prepaying it is permitted to charge a lower price for the commodity.[16]
  3. If there is no fixed price in the market for an item it is permitted to pay for it in advance and have it delivered later.[17][18]
  4. It is forbidden for the perspective lender to counter the request of a loan with a subterfuge of having the lender borrow a commodity to then resell it to the lender for a cheaper price. Since the borrower originally requested a loan the borrower may not sell the commodity for a cheaper price when when the price is unclear in the marketplace.[19]
  5. If the buyer's intention is purely to buy the item on credit in order to sell it immediately for a cheaper value that is considered a prohibited since it as though the cheaper price is stipulated as the value of the loan and yet he agreed to repay a higher amount.[20]

This section isn't finished.

  1. Downpayments and early bird specials. 63b rav nachman says you can’t do an early bird special unless it is yesh lo. 65a he says you can do a downpayment and get the item now and pay more later as long as you don’t specify the price and tosfot 65b and 63b adds that if its price is evident in the market it is forbidden.

Future Contracts of Commodities

  1. It is forbidden to pay in advance for the later delivery of a commodity since it is possible that the price of the commodity will rise. The two ways to permit this is if the seller has the commodity already or the marketplace price is already fixed.[21]
  2. If the price of the commodity drops the buyer can renegotiate his part of the deal and buy it for cheaper.[22]

Marketplace Price Fixed (Yatza Hashaar)

  1. If the price of the marketplace is fixed it is permitted to pay in advance for the later delivery of a commodity. The reason is since the marketplace price is fixed it is possible for the seller to purchase the commodity immediately with the funds of the buyer. Therefore, it is as though the commodity is already in the position of the seller.[23]
  2. This leniency works independent of the leniency of the seller owning the commodity (Yesh Lo).[24]
  3. It is forbidden for the seller to charge less than the marketplace price since the buyer is paying in advance, even though the marketplace price is fixed.[25]

Has a Position of that Commodity (Yesh Lo)

  1. If the seller of the commodity already has the commodity at the time of the transaction it is permitted. Since the seller has the commodity at the beginning we can view the transaction as though he sold the commodity immediately for the fair marketplace price.[26] Even though they didn't formally have the buyer acquire that commodity at the beginning of the sale since this is only rabbinic interest it is permitted.[27]
  2. The seller has to have the full quantity of the commodity to fulfill his end of the deal at the time of the transaction for this leniency to apply.[28] It isn't similar to the rules of seah bseah since this is considered a sale and not a loan. Therefore, it is necessary for the seller to sell his commodity to the buyer and having part of the commodity is insufficient, whereas for a loan, it is possible to view it as though the borrower lent out his commodity multiple times since something that he lent out remains in his property.[29]
  3. The seller is believed to say that he has the commodity he is transacting.[30]
  4. This leniency is specific to where the seller has the commodity and doesn't extend to where the seller has cash with which he could use to buy the commodity.[31]
  5. It is permitted to charge a lower price than the marketplace price if the seller has the commodity at the time of the transaction. This isn't similar to relying on the leniency of Yatza Hashaar.[32]

Repaying a Loan with a Future in Commodities

  1. When a person purchases a commodity at a future date by making an advanced case payment there are two possible leniencies: if the seller has the commodity or if the marketplace price is fixed. However, if the original transaction is a result of a loan that the seller owed to the buyer and he is using that loan to purchase a future of commodities this transaction can only be permitted when the seller owns the commodity.[33] The reason for this distinction is because the leniency of having a marketplace price fixed is that it is possible for the seller to cover his obligation by purchasing the commodity in the marketplace at the time of the transaction. However, if he is doing this transaction as a repayment of a loan that unpaid debt can't possibly be used to buy a commodity in the market.[34]
  2. A person purchased a commodity at a future date with a preexisting loan that the seller owes him. As explained this is only permitted if the seller has that commodity. If later at the time of the delivery date they renegotiate that the seller will exchange the first commodity with another one, it is only permitted if the seller has the second commodity.[35]
  3. A person purchased a commodity at a future date by making an advanced cash payment. Later when the commodity is due to be delivered he renegotiated with the seller to exchange the commodity he was supposed to acquire with another commodity for the current value of the commodity he is owed. This transaction according to some is only permitted if the seller owns a position of the second commodity that is sufficient to cover paying out this transaction. However, according to others it is permitted as long there is a fixed marketplace price.[36]

Stipulations for a Default on a Loan

  1. It is forbidden for a person to stipulate that if the borrower can't repay his own he must give a certain commodity to the lender for the price of the commodity that it was worth at the time of the loan. Since this transaction was conditionally a loan it must follow the rules of a loan exchanged for a future in commodities.[37]

Future Contracts

  1. It is permitted to do a future contract for a commodity or stock when one doesn't buy the commodity now at all and doesn't pay for it but merely pays a margin deposit. That is considered as though one agreed to buy or sell something at a later date and there's no advanced payments.[38]

Purchasing Futures of a Commodity (Poskin Al Hapeirot)

  1. You can buy gourds that are small in the field when they’ll ripen even if the price is cheaper when you pay now.[39]
  2. If you specify that if the price goes up then it is an investment and if it goes down it is a loan, that is invalid and is considered a loan with ribbit.[40]

Sources

  1. ↑ Shulchan Aruch YD 173:7, The Laws of Ribbis p. 132, Rav Hershel Schachter (Dinei Ribbis min 40)
  2. ↑ The Laws of Ribbis p. 133
  3. ↑ Rav Hershel Schachter (Dinei Ribbis approx min 40)
  4. ↑ Rav Hershel Schachter (Dinei Ribbis approx min 40)
  5. ↑ Rav Hershel Schachter (Dinei Ribbis approx min 40)
  6. ↑ Rambam Malveh Vloveh 8:1 clarifies that it is only rabbinically forbidden to charge more for buying on credit since it is presented as a sale not a loan. Shach 173:4 agrees.
  7. ↑ Gemara Bava Metsia 65a, Shulchan Aruch Y.D. 173:1
  8. ↑ Tosfot b"m 63b, Rosh b"m 5:22
  9. ↑ Gemara Bava Metsia 65a
  10. ↑ Shulchan Aruch Y.D. 173:1
  11. ↑ Baal Hatrumot 46:4:30 citing Ramban 65a s.v. amar, Rabbi Akiva Eiger 173:1, Shach 173:5, Chelkat Binyamin 173:28
  12. ↑ Chelkat Binyamin 173:28 citing the Sama 173:30 based on Rama 173:1
  13. ↑ Chelkat Binyamin 173:28
  14. ↑ Chavot Daat 173:3, Chelkat Binyamin 173:31
  15. ↑ Shulchan Aruch Y.D. 173:7
  16. ↑ Shulchan Aruch Y.D. 173:7
  17. ↑ Gemara Bava Metsia 65a, Tosfot b"m 63b s.v. vamar, Rama 173:7
  18. ↑ Rama 173:7 says you can do poskin on parah or talit even ein lo. That’s based on Tosfot 63b s.v. vamar that says if there’s no shuma then we’re not calling it agar natar we’re calling it tarsha. But what about the fact it might go up on its own like poskin al hapeirot?
    • Bear Hagolah 173:18 and Tiferet Lmoshe on Shach 173:18 answer that fruit will have a market price if not now then at some later point, but a cow will never. Bear Hagolah and Tiferet Lmoshe are slightly different. Bear Hagolah says that there's no concern it'll go up in price because the seller can give the buyer a slightly cheaper cow. Chelkat Binyamin fnt. 173:349 thinks that this reasoning of the Bear Hagolah isn't precise. However, the Tiferet Lmoshe says that there's no concern it'll go up in price since the price isn't establish it never appears as interest. Chida in Birkei Yosef 173 sides with the Bear Hagolah. This approach is supported by many achronim including Shaar Deah 8, Chachmat Adam 139:4, Or Same'ach b"m 64a s.v. bs"a, Avnei Nezer YD 210:4, and Bet Meir on Taz 173:12 cited by Mesivta Yalkut Biurim b"m 63b p. 60.
    • Shach 173:17 answers that parah is yatzah shaar in that the factors necessary to determine its price like per pound is shaar kavuah
    • Taz 173:12 argues on rama and says its only if it didn’t go up.
    • Chavot Daat 173:11 there’s no shiybud haguf here if you give them a specific item, but there is for the general fruit which you can give them any fruit.
    • Rav Chaim (on shas n. 75 cited by Mesivta Yalkut Mefarshim b"m 63b p. 60) explains that once the commodity is promised to the supplied even though he doesn't own it it is partially yesh lo and we're not concerned about the price fluctuation.
    • Chelkat Binyamin 173:108 concludes that one can be lenient like the Bear Hagolah's approach and generally give a prepayment to receive more if the price of the item isn't readily determined and isn't going to become readily determined by people.
  19. ↑ Taz 163:6
  20. ↑ The Ritva b"m 65a cited by Bedek Habayit 173 writes that if someone purchases a commodity on credit it is permitted if the price isn't clear. However, if the buyer immediately sells it for less it shows that the loan obligated him to pay more than the value of the item and is interest. Chatom Sofer YD 137 follows the Ritva and writes that one can't bring a proof from Shulchan Aruch 163:3 or Taz 163:6 who imply otherwise since they didn't have the Ritva.
  21. ↑ Shulchan Aruch Y.D. 163:1
  22. ↑ Mishna Bava Metsia 72b, Shulchan Aruch Y.D. 175:7
  23. ↑ Mishna Bava Metsia 72b, Shulchan Aruch Y.D. 175:1
  24. ↑ Shulchan Aruch 163:1. See Gra 163:3 who cites Rashi who disagrees and requires both where the original sale starting with a loan.
  25. ↑ Shach 163:4 writes that the leniency of Yatza Hashaar when the contract was set up with a loan doesn't allow charging more than the marketplace price. He is writing this to answer the doubt of the Prisha. Shulchan Aruch 175:1 and 173:7 clarify this point that when using the leniency of Yatza Hashaar one must charge only that price and not a lower price.
  26. ↑ Mishna Bava Metsia 60b, Rav Oshiya on 63b, Shulchan Aruch Y.D. 163:1
  27. ↑ Rashi writes that once money is paid the seller can't back out and if he does he is cursed with a Mi Shepara. However, the buyer didn't make a formal kinyan but it isn't necessary since this is only rabbinic interest. Bet Yosef 163:1, Taz 163:3, and Shach 163:3 cite this Rashi.
  28. ↑ Rambam Malveh Vloveh 10:6, Ritva b"m 63a s.v. veshma mina, Shulchan Aruch Y.D. 163:1. Chelkat Binyamin 163:7 clarifies that even though the Rabbenu Yerucham was lenient even if the seller only had some of the commodity we follow the Shulchan Aruch.
  29. ↑ Shach 163:2 and Taz 163:2
  30. ↑ Rama 163:1
  31. ↑ Shulchan Aruch 163:1. The Rosh b"m 5:7 implies that it is sufficient for the seller to have cash. Bet Yosef 163:1 argues that this is a mistake and obviously it is necessary to have the commodity and cash is insufficient. The Tiferet Shmuel 5:1 and Pilpula Charifta 5:7:30 agree. Maharam Shif 63a s.v. haashri presents an approach to explain the Rosh if he actually meant that money is sufficient. Taz 163:4 argues that the Rashi, Tur, and Rosh hold that money is sufficient but decides that we should be strict. Gra 163:1 points out that the Mordechai and Hagahot Ashri in fact do have this leniency even if one just has cash. He also concludes that the Rambam thinks it is necessary to have the commodity and not just money.
  32. ↑ Tosfot Bava Metsia 63b s.v. vamar, Ramban b"m 46a, Shulchan Aruch 173:7
  33. ↑ Bava Metsia 63a, Shulchan Aruch 163:1. Rabba in b"m 62b and Rav Oshiya on 63a explain that when a person pays the lender with a commodity at a future date there is a concern for ribbit since the price of the commodity might rise. This problem isn’t solved by the fact that there is an established market price since the borrower wouldn’t be able to buy the commodity with the pre-existing loan. Therefore, if the borrower wants to pay with a commodity at a later date and there is a concern that the commodity will change prices in between it is forbidden to do so since the transaction began as a loan and he might be repaid more than he lent. This is forbidden even if the price of the commodity is established in the marketplace.
  34. ↑ Shach 163:4, Taz 163:4.
    • Rashba 62b clarifies that although when discussing seah bseah it is sufficient to have some of the commodity and halachically we consider it as though there were multiple sales using this commodity. However, in the case of a loan that was exchanged for a commodity it remains a loan and in order to permit the potential interest it is essential that it is viewed as a real sale. It is only possible to consider the exchange a real sale if the borrower has the quantity he is offering the lender at the time of the agreement to exchange for the commodity.
  35. ↑ Mishna Bava Metsia 60b, Shulchan Aruch Y.D. 163:2
  36. ↑ Rif bava metsia 34b, Nemukei Yosef 34b quoting Rabbenu Chananel and Rav Hai Goan, Rashba 62b s.v. vki, and Gra Y.D. 175:10 are lenient. The Rif explains that as long as the initial transaction was a sale in the future of a commodity and not a loan it is permitted to switch over the first commodity to the second even if the borrower doesn’t have the commodity.
  37. ↑ Bet Yosef 163, Shach 163:4
  38. ↑ Ribbit Btachnit Chischon Lkol Yeled p. 33 writes that buying a future contract isn't considered like pesika since it is only an arrangement that one promises to later buy something when the contract is due. The fact that money is paid for the contract in advance is purely a deposit and that is why there is no interest paid for buying a future contract. He cites Mishpat Shalom cm 209 in his support.
  39. ↑ Tosfot 64a s.v. ma says that you could buy wine from the vineyard even though it isn’t produced yet as long as you don’t specify how much and just buy everything. Also once the grapes are small it is permitted to buy the wine that will be produced later. That’s similar to buying gourds when they ripen if they’re now small (64a). However, the Nemukei Yosef 43b disagrees on both points. It is forbidden to buy the wine from the vineyard even if you don’t specify an amount since it isn’t produced yet. Also, since no one buys unripe grapes even when they’re unripe it isn’t like they’re relevant to allow buying wine that is produced from them. However, gourds are sometimes sold unripe. Rama 173:10 accepts Nemukei Yosef.
  40. ↑ Tosfot b"m 54a s.v iy explains that since a person accepted the achrayut of the money it is certainly a loan.
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