Overcharging

From Halachipedia

Cheating a customer or a seller by overcharging is a serious sin. Sometimes the sale is halachically null and void, while in other cases it is still valid.

Prohibition of Overcharging

There is a Torah prohibition to overcharge (as a seller) or underpay (as a buyer) when the other party is unaware of the market value for such an item.[1] This is split into three categories:

  1. More than 16% above market price - this amount is considered onaa and the buyer can invalidate the sale.
  2. Exactly 16% above market price - the sale is valid, but the extra money that the buyer paid must be returned.
  3. Within 16% above market price - the sale goes through and the extra money that the buyer paid need not be returned.[2]

Some poskim hold that this prohibition only applies to a Jew and it isn't issue of stealing since the non-Jew paid willingly. Only for Jews is it necessary to make sure to charge the market price and not more.[3] However, other poskim hold that it is forbidden to overcharge a non-Jew just like it is forbidden to overcharge a Jew.[4] Everyone agrees that it is forbidden to cheat a non-Jew by misrepresenting the product.[5]

Nowadays Fluctuating Prices

  1. Nowadays, most items don’t have a set price. Therefore, one would only be allowed to cancel a sale if there is a set price for that item in every store in the area and he was charged more than 16% above that set price.[6]
  2. Some poskim say that items that don’t have a set price don't have onaah,[7] however, other poskim hold that there is onaah on these items.[8]
  3. When there are multiple prices for an item in the market, what is considered the price for purposes of onaah?
    1. Some say that it is defined by the price that majority of sellers (if majority of the sellers agree on one price).[9]
    2. Some suggest that it is the average price between the highest price and lowest price in the market.[10]

When Onaah Does Not Apply

  1. Somebody who invents something unique, such as if he got a patent, may sell the invention or the copyright for whatever price he wants. However, retail stores which sell that item cannot sell it for more than 16% above what it is sold for in other stores.[11]
  2. If a store which is well known for its high prices because of its high quality, its convenience, or its customer service, charges higher than usual prices, the laws of onaah will not apply.[12]
  3. Onaah doesn’t apply to land. Therefore, if one is buying or renting a house or apartment, we do not cancel the sale if he was charged too much.[13] Nonetheless, it is biblically forbidden to overcharge or underpay for land when the other party is not aware of the true market value of the land.[14]
  4. Onaah doesn’t apply to the following items: antiques,[15] investments,[16] and documents.[17] There is onaah on second hand items.[18]

Links

Sources

  1. ↑ Vayikra 25:14 states “וכי תמכרו ממכר לעמיתך או קנה מיד עמיתך אל תונו איש את אחיו” “And when you make a sale to your fellow Jew or make a purchase from the hand of your fellow Jew, you shall not wrong one another.” The Rambam in Sefer Hamitzvot Lo Taaseh 250 as well as in Mishne Torah (Mechira 12:1) considers it to be one of the 613 mitzvot. This is also the opinion of the Sefer HaChinuch (Mitzvah 337). The Mishna Bava Metsia 51a says that this prohibition applies both to the buyer or seller. The general prohibition of onaa is codified by Shulchan Aruch C.M 227:1, Kitzur Shulchan Aruch 62:1, Halichot Bein Adam Lachavero 10:30, and Pitchei Choshen Geneva Vihonaa 10:1.
  2. ↑ Gemara Bava Metzia 50b, Halichot Bein Adam Lachavero 10:31. Rambam Mechira 12:3 explains that the reason that the sale is valid if the price is less than 1/6 above market price is because most people willingly forego such a small difference. Rosh Bava Metzia 4:20 writes that it is because it is impossible to be perfectly precise. Although Sefer Hachinuch (Mitzva 337) writes that charging that little above market price is totally permissible, the Ramban in his commentary on the Torah (Vayikra 25:14) writes that one still violates the prohibition even though he need not return the difference. Shulchan Aruch CM 227:6 quotes both opinions without conclusion. Pitchei Choshen Geneva Vihonaa 10:2 also doesn’t rule conclusively but says that a God fearing person should be strict and not do it. Chatom Sofer and Imrei Binah to 227:6 conclude that a person should not charge more than the fair price at all, even less than 1/6. Whether the distinction of 1/6 is rabbinic, see Tosfot (Bava Metsia 52a s.v. ashik) and Rosh (Bava Metsia 4:20 s.v. gufa cited by Tur 227:6) who imply that it is only rabbinic. See Rav Chaim (Mechira 15:1) who implies that it is biblical.
  3. ↑ Pitchei Choshen (Onah ch. 10 fnt. 2) quoting Gra 348:2, Sma 231:1, Bach 228, and Kesef Kodshim 382 hold that there's no prohibition to overcharge a non-Jew. Hilchot Honah p. 198, Mishpat Hachoshen (Onah 23:7), Mamon Kasher p. 93, and Darkei Mishpat v. 3 5:4 agree that it is permitted. Mishpat Hachoshen quotes Minchat Pitim 227:6 and Avnei Nezer OC 325 and CM 55 who hold this way.
  4. ↑ Mishkenot Yakov CM 59 s.v. v'od, Rav Hershel Schachter (Hilchos Onaah, min 5-10). Mishpat Hachoshen (Onah 23:7 fnt. 9) quotes Rashash Bechorot 13 as holding that it is forbidden to overcharge a non-Jew.
  5. ↑ Raam 348:2, Pitchei Choshen (Onah 10 fnt. 2), Mamon Kasher p. 93
  6. ↑ Halichot Bein Adam Lachavero 10:32, Rav Asher Weiss (Kovetz Darkei Horaa Tammuz 5765 2 pg. 124). See Pitchei Choshen Geneva Vihonaa 10:1 who discusses practical applications for nowadays and seems to conclude that one calculates it from the median price in that area.
  7. ↑ Bet Yosef CM 209:1, Rav Asher Weiss (Mishpatei Eretz v. 3 p. 340), Halichot Bein Adam Lachavero 10:47
  8. ↑ Shevet Halevi 5:218. Rav Asher Weiss (Mishpatei Eretz v. 3 p. 340) writes that there's no onaah for items that don't have a fixed market price. He is based on Bet Yosef CM 209:1(2) that there's no onaah for something that doesn't have a known market price. However, Bach 209:1, Darkei Moshe 209:1, Shach 209:1, Drisha (Hagahot Drisha Vprisha 209:1), and Taz 209:1 disagree with Bet Yosef. Shevet Halevi 5:218 follows Bach and others, while Rav Asher Weiss agrees with Bet Yosef. The proof that Rav Asher quoted from Rosh 13:20 for Bet Yosef, Shevet Halevi already explained why it is irrelevant. Rosh says that there's no onaah for a seller's license since its price changes. Rav Asher explains that this is like Bet Yosef's idea that there's no onaah for something with no fixed price. However, Shevet Halevi explains that there's onaah since there's no way to evaluate the price of the license since its value really depends on the income it'll bring in that year, which is an unknown changing quantity.
  9. ↑ Pitchei Choshen (Geneva Vonaah ch. 10 fnt. 1 s.v. v'l'iydach) quoting Imrei Yosher, Rav Zalman Nechemya Goldberg (Mishpatei Aretz v. 3 p. 337)
  10. ↑ Rav Asher Weiss (Mishpatei Aretz v. 3 p. 343)
  11. ↑ Halichot Bein Adam Lachavero 10:36, Hilchot Mishpat pg. 294. This is based on the Rosh BM 4:20 that the whole basis for onaa is if you can acquire the item somewhere else for cheaper.
  12. ↑ Halichot Bein Adam Lachavero 10:37, Mishpitei Hatorah 2:1, since people are willing to pay extra for this convenience
  13. ↑ Shulchan Aruch CM 227:29, 32 based on Mishna Bava Metzia 56a rules that there is no onaa on the sale of land. The Gemara Bava Metsia 56b says that renting of objects or land is considered a temporary sale and therefore there is onaa. This is codified by Shulchan Aruch CM 227:33-35. Halichot Bein Adam Lachavero 10:45 and Pitchei Choshen Geneva Vihonaa 10:5 agree. Rabbenu Tam cited by Tosfot Ketubot 98a s.v. almanah based on the Yerushalmi (Ketubot 11:4) writes that if you charge double or more of the going price of land, then it is certainly considered onaa and the sale is invalid. Tosafot Bava Metsia 57a s.v. Amar and Bava Kama 14b s.v. Davar, and Rosh (Bava Metsia 4:21) agree. The Rama CM 227:29 codifies this opinion but only says that if it is more than double it is onaa. However, the Sama 227:50 points out that Rabbenu Tam in Ketubot and the Rosh explicitly say even exactly double is onaa. On the other hand, Rif (Bava Metsia 32a-32b) at length disagrees with the opinion of some geonim who thought that the sale of land is invalid if one charges more than double. The Rambam (Mechira 13:8) states that there’s no onaa on land for any price even if you overcharge by tenfold. This is also the opinion of the Bet Yosef CM 227:29.
  14. ↑ Pitchei Choshen Geneva Vihonaa 10:3. The Ramban Vayikra 25:14 points out that even though the Gemara learns that land is excluded from onaa, according to the simple explanation of the pasuk, it is clearly forbidden to cheat someone on the sale of land. In fact, he says that the simple explanation is so compelling that he suggests that there is a biblical prohibition to cheat someone on the sale of land, it is just excluded from the laws of returning the money. The Minchat Chinuch 337:3 argues that the Rambam would agree with the Ramban because he holds that gezel applies to land and the gemara Bava Metsia 61a suggests that onaa would be sufficient to replace the prohibition of gezel. However, he notes, that the Tosfot ad loc. s.v. alah would argue with the Ramban’s premise and assume that there’s no prohibition of onaa on land at all. The Pitchei Teshuva CM 227:21 quotes this Ramban. Similarly, the Sama CM 227:51 cites the Maharshal who holds that it is onat devarim to cheat someone on a sale of land.
  15. ↑ Halichot Bein Adam Lachavero 10:47, Mishpitei Hatorah 2:4
  16. ↑ Halichot Bein Adam Lachavero 10:47 writes that for something that the buyer is projecting the value of the item to rise greatly there is no honaa. Teshuvat Harosh 13:20
  17. ↑ Shulchan Aruch CM 227:29. This exclusion would apply nowadays to the purchase and sale of most financial documents – stocks, bonds, treasury bills, etc. – since they do not have intrinsic value and only represent the debt or share in the company. (Business Halacha: Overcharged by the Mechanic by Rabbi Meir Orlian). Nonetheless, the Minchat Chinuch 337:3 assumes that documents have the same halacha as land where the sale is valid but it is forbidden to overcharge. Pitchei Choshen Geneva Vihonaa 10:3 agrees.
  18. ↑ Mishpatecha Lyakov 8:28
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