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Corporations and Partnerships with Respect to Ribbit: Difference between revisions

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# 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>
# 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>
## 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>
===Alternate Versions of Iska===
====Capping Profits====
# If an iska is otherwise set up correctly with half of it a loan and half investment and there's a wage paid to the agent, then it is permissible to fix a cap of return profit that the agent would have to give and if he made more he can keep it.<ref>Taz 177:12</ref>
# It is permitted to arrange that if the agent makes any profit he needs to pay a certain fixed amount to the investor, if the agent doesn't make profit he is exempt, and if he loses then the agent and the investor split the loses.<ref>Taz 177:12</ref>
====All Profits to Agent====
# It is impermissible to have all of the profits of the investment to accrue to the agent for a fixed fee that the agent pays the investor. Doing so is finding a loophole in the laws of interest and forbidden.<ref>Taz 177:12 in explaining Shulchan Aruch 177:6, Chelkat Binyamin 177:91</ref>
# It is forbidden to stipulate that the gains and losses accrue to the agent and the agent owes a fixed amount to the investor. This is considered taking interest even if the investor accepts the responsibility for if it is lost, stolen, or an unexpected circumstance.<Ref>Chelkat Binyamin 177:91 based on Prisha and Bach in explaining Shulchan Aruch 177:6, Rama 177:6. Even though Shach 177:20 is lenient, Chelkat Binyamin 177:98 rules against him.</ref>
====All Profits to Investor====
# It is permitted for the investor to make all of the profits of an iska if he pays for the wages and additionally pays the agent an extra fixed income to offset the profits he is acquiring from the agent. It is permitted since there is an element of risk as the investor doesn't know how much profit will be made if at all.<ref>Taz 177:12</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>
====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>


===How to Permit an Iska===
===How to Permit an Iska===
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====Rolling Over a Iska Upon its Maturity====
====Rolling Over a Iska Upon its Maturity====
# Many poskim hold that upon maturity date of the iska if the investor and agent don't stipulate what to do or actually return the money, it is considered to be assumed that the same iska setup will continue. In other words, the first iska rolls over into another iska unless otherwise stipulated.<ref>Taz 177:14, Chelkat Binyamin 177:112. This is regarding a regular iska with part loan and part investment. In Chelkat Binyamin (Biurim s.v. muter p. 650) he quotes a dispute between the Isrei Esh 56 and Bet Yitzchak 2:7 whether a heter iska of the Maharam would rollover to another iska. However, that was specifically because the arrangement was such that there was a period of investment and then a period of loan and the dispute was whether it would automatically rollover to another deal with the same conditions.</ref>
# Many poskim hold that upon maturity date of the iska if the investor and agent don't stipulate what to do or actually return the money, it is considered to be assumed that the same iska setup will continue. In other words, the first iska rolls over into another iska unless otherwise stipulated.<ref>Taz 177:14, Chelkat Binyamin 177:112. This is regarding a regular iska with part loan and part investment. In Chelkat Binyamin (Biurim s.v. muter p. 650) he quotes a dispute between the Isrei Esh 56 and Bet Yitzchak 2:7 whether a heter iska of the Maharam would rollover to another iska. However, that was specifically because the arrangement was such that there was a period of investment and then a period of loan and the dispute was whether it would automatically rollover to another deal with the same conditions.</ref>
===Alternate Versions of Iska===
====Capping Profits====
# If an iska is otherwise set up correctly with half of it a loan and half investment and there's a wage paid to the agent, then it is permissible to fix a cap of return profit that the agent would have to give and if he made more he can keep it.<ref>Taz 177:12</ref>
# It is permitted to arrange that if the agent makes any profit he needs to pay a certain fixed amount to the investor, if the agent doesn't make profit he is exempt, and if he loses then the agent and the investor split the loses.<ref>Taz 177:12</ref>
====All Profits to Agent====
# It is impermissible to have all of the profits of the investment to accrue to the agent for a fixed fee that the agent pays the investor. Doing so is finding a loophole in the laws of interest and forbidden.<ref>Taz 177:12 in explaining Shulchan Aruch 177:6, Chelkat Binyamin 177:91</ref>
# It is forbidden to stipulate that the gains and losses accrue to the agent and the agent owes a fixed amount to the investor. This is considered taking interest even if the investor accepts the responsibility for if it is lost, stolen, or an unexpected circumstance.<Ref>Chelkat Binyamin 177:91 based on Prisha and Bach in explaining Shulchan Aruch 177:6, Rama 177:6. Even though Shach 177:20 is lenient, Chelkat Binyamin 177:98 rules against him.</ref>
====All Profits to Investor====
# It is permitted for the investor to make all of the profits of an iska if he pays for the wages and additionally pays the agent an extra fixed income to offset the profits he is acquiring from the agent. It is permitted since there is an element of risk as the investor doesn't know how much profit will be made if at all.<ref>Taz 177:12</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>
====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>


==Sources==
==Sources==
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<references/>
[[Category:Ribbit]]
[[Category:Ribbit]]
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