Corporations and Partnerships with Respect to Ribbit: Difference between revisions
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Corporations and Partnerships with Respect to Ribbit (view source)
Revision as of 22:01, 23 June 2020
, 23 June 2020→Terms and Conditions of the Iska
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# It is permitted to create whatever conditions the investor would like upon the agent and if the agent doesn't follow those conditions then the agent takes responsibility for all of the losses and the gains continue to be split as before. Indeed it is permitted for the gent to not follow these conditions.<ref>Rama Y.D. 177:5. It isn't considered as though the agent stole the money since he is doing so for the benefit of the investor (Shulchan Aruch Y.D. 177:5, Taz 177:10). </ref> It isn't considered more beneficial to the investor (''karov lsachar vrachok mhefsed'') since he can only gain and not lose because the original made it possible that it would been a regular iska.<ref>Shulchan Aruch Y.D. 177:5. Shach 177:17 clarifies that this is only permitted since an iska is only rabbinic interest to begin with.</ref> | # It is permitted to create whatever conditions the investor would like upon the agent and if the agent doesn't follow those conditions then the agent takes responsibility for all of the losses and the gains continue to be split as before. Indeed it is permitted for the gent to not follow these conditions.<ref>Rama Y.D. 177:5. It isn't considered as though the agent stole the money since he is doing so for the benefit of the investor (Shulchan Aruch Y.D. 177:5, Taz 177:10). </ref> It isn't considered more beneficial to the investor (''karov lsachar vrachok mhefsed'') since he can only gain and not lose because the original made it possible that it would been a regular iska.<ref>Shulchan Aruch Y.D. 177:5. Shach 177:17 clarifies that this is only permitted since an iska is only rabbinic interest to begin with.</ref> | ||
## If the agent explicitly states that he is [[steal]]ing the funds for himself,<ref>Taz 177:11 notes that it is only effective if the agent states that he is stealing it at the time that he used it for himself, however, afterwards he isn't trusted to say he stole it as opposed to merely used it for the benefit of the investor against the conditions of the investor. Although Nekudat Hakesef 177:5 disagrees the Bear Heitiv 177:12 points out that this Nekudat Kesef is very difficult to understand. Chelkat Binyamin 177:83 agrees with Taz.</ref> then all the loses and gains accrue to the agent and not the investor. To avoid this it is advisable to stipulate that if the agent steals the money for himself then he must repay it to the investment. Thereby all profits will continue to accrue to the investor. If the practice is allow the agent to take money for himself and repay it then it isn't necessary to make such a stipulation explicit.<ref>Rama Y.D. 177:5</ref> | ## If the agent explicitly states that he is [[steal]]ing the funds for himself,<ref>Taz 177:11 notes that it is only effective if the agent states that he is stealing it at the time that he used it for himself, however, afterwards he isn't trusted to say he stole it as opposed to merely used it for the benefit of the investor against the conditions of the investor. Although Nekudat Hakesef 177:5 disagrees the Bear Heitiv 177:12 points out that this Nekudat Kesef is very difficult to understand. Chelkat Binyamin 177:83 agrees with Taz.</ref> then all the loses and gains accrue to the agent and not the investor. To avoid this it is advisable to stipulate that if the agent steals the money for himself then he must repay it to the investment. Thereby all profits will continue to accrue to the investor. If the practice is allow the agent to take money for himself and repay it then it isn't necessary to make such a stipulation explicit.<ref>Rama Y.D. 177:5</ref> | ||
====Iska | |||
====Alterations to Transaction before Maturation==== | |||
=====A Loan that was Converted into an Iska===== | |||
# If a person made a loan and then in the middle of the duration of the loan wanted to change it into an iska, they can do so provided that they establish a valid mechanism of acquisition that would make the agreement legally binding. Many hold that it is sufficient to do a kinyan sudar or write a document that converts the loan into an iska. Others require that the lender acquire the capital to be returned or the commodity that the borrower will buy as part of the iska.<ref>Chelkat Binyamin 177:171 cites that the Dagul Mirvava on Shach 177:41 thinks that a kinyan sudar or shtar is sufficient to conver ta loan into an iska, and the Graz argues that only acquiring the money that is to be returned or the product that the borrower is buying is effective.</ref> | |||
# If someone didn't convert the loan into an iska effective and instead only orally agreed upon it, then it is essentially still a loan. The borrower even in the event that he profits does not have to split those profits with the investor.<ref>Maharshal in Yam Shel Shlomo b"k 8:70 that if they merely orally agree to switch the loan into an iska it is unchanged and in the event of loss the investor doesn't lose. Shach 177:41 cites this.</ref> If the borrower invested and profited there is a discussion if it is allowed for him to voluntarily give some of the profits to the investor.<ref>Maharshal in Yam Shel Shlomo b"k 8:70 indeed writes that even though the borrower isn't obligated to pay a portion of his profits to the lender since it is a loan, if he wishes to he may do so. The Shach 177:41 cites this. However, the Chavot Daat 177:19 disagrees since this is considered interest after the duration of the loan and forbidden. The Mekor Mayim Chayim 177:19 explains that the Maharshal thinks that the intent of the borrower is to treat it as a investment and so they can pay the profits since it isn't paid with intent for the time-value of money. Chelkat Binyamin 177:171 believes that this is effective even if the borrower and lender are aware that in fact it remained a loan. However, the Brit Yehuda ch. 35 fnt. 18 limits the Maharshal to where the borrower is unaware of the fact that the loan was not effectively changed into a iska. In any event, the Chelkat Binyamin is hesitant to rely upon the Maharshal and only relies upon him if it is after the time of the repayment of the capital and not at the same time as the repayment of capital.</ref> | |||
=====An Iska Agreement that was Converted into a Loan===== | |||
# An iska agreement that was renegotiated to be a loan with interest obviously is forbidden.<ref>Taz 177:14 points out that whether this is Biblical or rabbinic interest depends on the dispute in Shulchan Aruch 166:2.</ref> However, if the event that the agent continues to invest the money and indeed made the profits that were stipulated by the original iska, after the fact it can be considered as though they continued a permitted iska and the money doesn't need to be returned.<ref>Shulchan Aruch 177:7</ref> | # An iska agreement that was renegotiated to be a loan with interest obviously is forbidden.<ref>Taz 177:14 points out that whether this is Biblical or rabbinic interest depends on the dispute in Shulchan Aruch 166:2.</ref> However, if the event that the agent continues to invest the money and indeed made the profits that were stipulated by the original iska, after the fact it can be considered as though they continued a permitted iska and the money doesn't need to be returned.<ref>Shulchan Aruch 177:7</ref> | ||
# In this case if the investor claims that the agent made more profits he can't force the agent to swear.<ref>Shach 177:23, Chelkat Binyamin 177:111. See there for the discussion of the possibility of making the agent swear with a cherem and also the Dagul Mirvava's claim that there would be an obligation to swear because of the joint partnership (see C.M. 93:4).</ref> | # In this case if the investor claims that the agent made more profits he can't force the agent to swear.<ref>Shach 177:23, Chelkat Binyamin 177:111. See there for the discussion of the possibility of making the agent swear with a cherem and also the Dagul Mirvava's claim that there would be an obligation to swear because of the joint partnership (see C.M. 93:4).</ref> | ||
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#If an iska matured and there were profits unless the agent specifies with the investor about those profits that a part belongs to him and only the money that is disbursed to the investor rolls over to the next iska, it continues to be treated as one iska with splitting all the profits according to the original stipulation.<ref>Nemukei Yosef b"m 40b s.v. tanya cites a dispute between Tosfot and the Rambam whether the iska converts into a part partnership and part iska or remains complete iska. He says that Tosfot thinks it automatically developments into a part partnership since the original profits are split and then the new iska is only within the dividend that the investor received. However, the Rambam Sheluchin ch. 8 thinks that it remains a complete iska unless the agent specifies or stipulates with a bet din otherwise. Shulchan Aruch 177:23 follows the Rambam.</ref> | #If an iska matured and there were profits unless the agent specifies with the investor about those profits that a part belongs to him and only the money that is disbursed to the investor rolls over to the next iska, it continues to be treated as one iska with splitting all the profits according to the original stipulation.<ref>Nemukei Yosef b"m 40b s.v. tanya cites a dispute between Tosfot and the Rambam whether the iska converts into a part partnership and part iska or remains complete iska. He says that Tosfot thinks it automatically developments into a part partnership since the original profits are split and then the new iska is only within the dividend that the investor received. However, the Rambam Sheluchin ch. 8 thinks that it remains a complete iska unless the agent specifies or stipulates with a bet din otherwise. Shulchan Aruch 177:23 follows the Rambam.</ref> | ||
====Disputes Between Investor and Agent==== | ====Disputes Between Investor and Agent==== | ||
# The agent claimed that there were profits and gave distributions or dividends to the investor based on those claimed profits. Then after the duration of the investment the agent claims that it was fraud and in fact he did not profit and should only return the capital after deducting the distributions or dividends he made. The halacha is that he is not believed and the investor is entitled to his entire capital since it was given as a profit.<ref>Shulchan Aruch C.M. 81:30, Y.D. 177:20</ref> | # The agent claimed that there were profits and gave distributions or dividends to the investor based on those claimed profits. Then after the duration of the investment the agent claims that it was fraud and in fact he did not profit and should only return the capital after deducting the distributions or dividends he made. The halacha is that he is not believed and the investor is entitled to his entire capital since it was given as a profit.<ref>Shulchan Aruch C.M. 81:30, Y.D. 177:20</ref> | ||
