Corporations and Partnerships with Respect to Ribbit: Difference between revisions
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==Iska== | ==Iska== | ||
===Definitions=== | |||
# It is forbidden to give someone money to invest with an equal or greater amount of potential for the owner to gain than the worker because doing so is interest. The deal is considered to have more potential for the owner to gain than lose (''karov lsachar vrachok mhefsed''). The only reason that the worker would accept such a deal is because the owner is extending him a loan through which the worker can gain.<ref>Rashi b"m 68a s.v. ein, Shulchan Aruch Y.D. 177:2</ref> | |||
# If someone gives his worker money and says that half is considered a loan and half an investment that is considered an iska and is forbidden without any other solutions. The half loan can be used by the worker for his own investment but it is completely his responsibility to repay the capital. The half investment is not to be used by the worker for his personal needs, is in the domain of the borrower, and whatever it gains or loses goes to the owner. This is a classic ''iska'', which literally means investment.<ref>Shulchan Aruch Y.D. 177:2</ref> | |||
## For example, if a person gives the worker $100 for an iska. The worker invests all of the money and makes $10 profit. In a classic iska, the worker and owner would split the profits and the worker would return $105. Let's say that the worker invested and lost $10. In the iska arrangement, the worker and owner would again split the losses and the worker would return $95. This arrangement is forbidden without any other solutions.<ref>Shulchan Aruch Y.D. 177:2</ref> | |||
===How to Permit an Iska=== | |||
# This can be remedied by either making it a favorable deal for the worker or by paying him. To make the deal favorable for the worker that would mean making it such that there is a greater percentage of gains that the worker makes than the percent of losses he assumes.<ref>Shulchan Aruch Y.D. 177:2-3</ref> | |||
# In the above example, if the worker was given a stipulation under which he would keep 2/3 of the gains and only assumed 1/2 of the losses, then it would be permitted. So, when he gained $10 he would return $103.3 and when he would lose $10 he would return $95. Alternatively, they could have arranged that the worker would keep 1/2 of the gains and only assume 1/3 of the losses. For our example, when the worker would gain $10 he would have to return $105 but in the case of a $10 he would return $93.3.<ref>Gemara Bava Metsia 68b-69a</ref> We hold that this arrangement is effective with any percentages as long as the amount that the worker stands to gain is greater than the amount he stands to lose.<ref>These stipulations are those of the Gemara Bava Metsia 68b as understood by the Raavad Sheluchin 6:3, Tur 177:4, Shach 177:14, Taz 177:8, and Chelkat Binyamin 177:70. This can be followed even if not stipulated in advance. However, once it is stipulated in advance it is sufficient to give the worker even a small increase (Shulchan Aruch 177:3, Chelkat Binyamin 177:162).</ref> | |||
====Wages for an Iska Worker==== | |||
# Poel batel's wage is defined as asking that the person would take as a salary not to have to work at all. This price would vary depending on their job.<ref>Chelkat Binyamin 177:31 and Milvah Hashem 2:12:4 follow the opinion of Tosfot either because Shulchan Aruch didn't clarify and we can be lenient since it is only rabbinic or because it is the simplest explanation in the words of Shulchan Aruch and the Bet Yosef elaborated upon that opinion. Chavot Daat 177:3 also holds that opinion.</ref> | |||
===Iska for Commodities=== | |||
# If someone takes a job to improve and sell the merchandise or livestock of someone else and he accepts all responsibility of its losses and also agrees to pay its original price if it is destroyed or dies that is forbidden as interest. Even though the worker gains from a percent of the profits of the merchandise or livestock the deal is considered to have more potential for the owner to gain than lose (''karov lsachar vrachok mhefsed''). The only reason that the worker would accept such a deal is because the owner is extending him a loan, the commodity, through which the worker can gain.<ref>Gemara Bava Metsia 68a, 70b, Rashi 68a s.v. ein, Shulchan Aruch Y.D. 177:1</ref> | |||
===Iska that Completely Benefits the Owner=== | |||
# If someone is doing an investment<ref>Chelkat Binyamin 177:19 writes that although the discussion of Rama 177:1 is about property it can also apply to money.</ref> entirely for the benefit of the investor and doesn't take any profits from the investments or has other benefits, he is considered an agent of the investor and not a borrower. In such a case it is permitted even for the agent to accept responsibility for the investment that if it depreciates that he will nonetheless return the capital since he is merely a guard with a lot of responsibility and not a borrower.<ref>Sh"t Ran 73 cites the Chachmei Lunil who said that if an investor has an agent invest his money and all the profits go to the investor, then the agent isn't considered a borrower. If so, he can take responsibility for the capital. He quotes that originally the Raavad argued with this leniency but seems to have retracted later. In the Ran himself he says that the agent can even be paid for his work. The Rama 177:1 cites this leniency as the halacha. Based on the Yerushalmi b"m 5:3 the Gra 177:5 supports this Rama but limits it to where the investor doesn't benefit. Chelkat Binyamin 177:16 writes that we are only lenient with this leniency if the borrower gains no benefit from the investment. That is, he isn't gaining a better reputation or is interested in getting another investment in the future with which he can make profits for himself. If he is gaining then he isn't an agent but rather a borrower since he is doing it for himself partially. In the Biurim he cites the Tiferet Lmoshe 170:2 who holds that even if there's any tangential benefit that the agent gains it is forbidden as we see from the case of a guarantor who doesn't personally gain from the loan but may not pay interest (S"A CM 170:1). Chelkat Binyamin disagrees.</ref> | # If someone is doing an investment<ref>Chelkat Binyamin 177:19 writes that although the discussion of Rama 177:1 is about property it can also apply to money.</ref> entirely for the benefit of the investor and doesn't take any profits from the investments or has other benefits, he is considered an agent of the investor and not a borrower. In such a case it is permitted even for the agent to accept responsibility for the investment that if it depreciates that he will nonetheless return the capital since he is merely a guard with a lot of responsibility and not a borrower.<ref>Sh"t Ran 73 cites the Chachmei Lunil who said that if an investor has an agent invest his money and all the profits go to the investor, then the agent isn't considered a borrower. If so, he can take responsibility for the capital. He quotes that originally the Raavad argued with this leniency but seems to have retracted later. In the Ran himself he says that the agent can even be paid for his work. The Rama 177:1 cites this leniency as the halacha. Based on the Yerushalmi b"m 5:3 the Gra 177:5 supports this Rama but limits it to where the investor doesn't benefit. Chelkat Binyamin 177:16 writes that we are only lenient with this leniency if the borrower gains no benefit from the investment. That is, he isn't gaining a better reputation or is interested in getting another investment in the future with which he can make profits for himself. If he is gaining then he isn't an agent but rather a borrower since he is doing it for himself partially. In the Biurim he cites the Tiferet Lmoshe 170:2 who holds that even if there's any tangential benefit that the agent gains it is forbidden as we see from the case of a guarantor who doesn't personally gain from the loan but may not pay interest (S"A CM 170:1). Chelkat Binyamin disagrees.</ref> | ||
==Sources== | ==Sources== | ||
<references/> | <references/> | ||
[[Category:Ribbit]] | [[Category:Ribbit]] | ||
