Corporations and Partnerships with Respect to Ribbit: Difference between revisions

# It is forbidden to charge or take interest from an individual Jew or group of Jews. Some poskim allow borrowing or lending on interest to a partnership of Jews and non-Jews if the non-Jews comprise at least half of the group to which one is lending or from which one is borrowing.<ref> The Shoel V’Nishal (Mahudra Kama 3:31) writes to Rav Shlomo Ganzfried, author of the Kitzur Shulchan Aruch, that he held that it was permitted to borrow or lend with interest from a partnership between Jews and non-Jews. He thought that since the partnership signs under the title of an entity and not individuals it is permitted according to Rashi and those who hold that lending on interest through a messenger is permitted. Further, even according to those who argue with Rashi, he thought that it was permitted if there are non-Jews in the group so that the Jews can say that they only profited from the non-Jewish borrowers and not the Jewish borrowers. Rav Yitzchak Schmelkes in Beis Yitzchak (v. 2 Kuntres Acharon no. 32) qualifies the Shoel V’nishal’s permit to cases where there are a majority or at least half non-Jews. Mishneh Halachot 6:145 and 13:130 permits borrowing or lending from banks that have a minority of Jewish shareholders because the Jewish shareholders don’t have a say in how the bank runs. The Maharam Shik YD 158 argues with the Shoel V’nishal’s logic; see there for his leniency with other conditions. </ref>

* Rama 177:3 and Shach 177:13 rule like the Smag and Rif. Chelkat Binyamin 177:56 agrees for Ashkenazim. For Sephardim, Milveh Hashem 2:12:26 rules like the Rambam. He cites the Maharbach 38, Maharikash on S"A 177:5, Chida in Shiurei Bracha YD 177:2, and Maharam Galanti 98 who all rule like the Rambam for Sephardim. Shulchan Aruch 177:24 follows the Rambam regarding a partnership as the Chelkat Binyamin 177:206 points out. Nonetheless, Horah Brurah 177:35 is lenient even for Sephardim.</ref>  

#Money that belongs to orphans who aren’t bar or bat mitzvahed can be lent with rabbinic interest<ref>Gemara Bava Metsia 70a concludes that it is only permitted to lend money of orphans as interest if the interest is only rabbinic but not if it is Biblical. This is accepted by the poskim and Shulchan Aruch Y.D. 160:18.</ref> but not Biblical interest.<ref>Although it was clear from the Bavli Bava Metsia 70a it is forbidden to lend money of orphans with Biblical interest, the Maharil responsa 73 cites a practice to do so and justifies it based on the Yerushalmi Sanhedrin 7. However, the Maharil concludes that the practice is completely invalid and should not be followed. The Rama 160:18 cites the maharil that this practice was completely rejected. Shach 160:27 adds that there’s no such practice any more as it was wrong. See Yabia Omer YD 5:13 who cites many rishonim who did explain that the yerushalmi held it was permitted. </ref> This is the practice.<ref>Even though the Shach 160:19 writes that the practice was not to lend orphan’s money with any interest even rabbinic interest, the Nodeh Byehuda YD 40 writes that the practice is completely justified based on the majority of rishonim and Shulchan Aruch. He testified that he did so personally. Pitchei Teshuva 160:20 cites the Nodeh Beyehuda. Chelkat Binyamin 160:200 agreed.</ref>

# If the orphan’s money was indeed lent with Biblical interest, if the borrower invested and in fact made as much as the percent interest that was demanded he needs to pay it.<ref>Shulchan Aruch Y.D. 160:19. The Rashba responsa 2:174 writes that if the orphan’s money was lent with Biblical interest it must be returned like any case of interest. However, the Maharil responsa 37 tries very hard to allow the orphans to keep it. The Maharam prague edition 969 has another justification.</ref> Some say that he only needs to pay it if he made twice as much as was demanded.<ref>The Bet Yosef 160:19 writes that even according to the Mordechai 332 and Maharam’s leniency that we view the loan with interest as though it was an investment (iska) that is permitted it is at most viewed as an iska transaction. Therefore, since in an iska half of the profits go to the investor the orphans only deserve have of the profits made up to the amount of the percent that they demanded. However, the Mahara Sason 162 argues that the lender has to pay all of his profits to the orphans and not just half. The Shach 160:32, Chachmat Adam 130:10, and Chelkat Binyamin 160:215 cite this dispute and do not offer any resolution.</ref>

* Yerushalmi Sanhedrin 8;2 establishes that it is permitted to lend with interest in order to have money for a meal of a mitzvah such to establish the kiddush hachodesh. Shibolei Haleket 55 applies this also to Shabbat meals. What type of interest is permitted for a mitzvah? Or Zaruah Tzedaka 30 explains that even Biblical interest is permitted to further a mitzvah. Mordechai b”m 287 cites Rabbenu Shmuel who agrees. This opinion is cited in the Aguda b”m 4:73, Maharil 37, and Hagahot Maimoniyot (kushta edition, malveh 4). Mahara Ben Tauba cited in Tashbetz 34 agreed. However, this opinion is rejected by the overwhelming majority of poskim as is evidenced by Bet Yosef 160:18.

* Maharam (krimnoa edition 109) holds that it is forbidden to lend money for charity with Biblical interest but it is permitted to lend them with rabbinic interest. This is also the opinion of the Rosh responsa 18:8, Rashba responsa 4:232, Shulchan Aruch 160:18, and Gra 160:43. Radvaz 6:2306 writes that everyone holds that rabbinic interest is permitted for charity.

# As long as they stipulate at the beginning of the arrangement it is permitted to give the agent any percent of profits that is greater than the percent of losses he assumes. That difference in percentages is his wages as long as he agrees.<ref>Rambam Sheluchin 6:4, Chelkat Binyamin 177:51. See Shulchan Aruch 177:3 and Shach 177:9 who also seem to agree. Rambam Sheluchin 6:4 quotes his teachers who thought that this leniency to stipulate that the worker receive a portion of the profits that is greater than the percent of losses he accepted is only effective as long as the agent has another investment that he is also dealing with for himself. Rambam himself disagrees. Chelkat Binyamin 177:3 s.v. bameh clarifies that the Gra holds that the Rif and Rosh are strict about this like the teachers of the Rambam. Nonetheless, the halacha is like the Rambam.</ref>

# If the agent is paid to spend all of his time working on investing the money then he isn't allowed to invest for himself on the side. If he does and profits, those profits belong to the investor.<ref>Shulchan Aruch Y.D. 177:29, Netivot Hamishpat CM 176:20, Chelkat Binyamin 177:234</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>

# 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>

# 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>