Corporations and Partnerships with Respect to Ribbit: Difference between revisions
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Corporations and Partnerships with Respect to Ribbit (view source)
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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> | ||
# The iska document must clearly state that it is an investment with part loan and part investment and not simply that it is a loan document or the like. Additionally, even if one is using a fixed cap for the profits that the agent needs to give the investor it is nonetheless forbidden to write that the agent owes that amount from the outset because it could be that he will not make those profits.<ref>Gemara Bava Metsia 68a, Shulchan Aruch Y.D. 177:24. Taz 177:33 clarifies that after the fact in the first case that it was stated as a loan then it is completely forbidden to accept any profits since indeed it is considered a loan according to the written document and we don't follow their oral agreement. However, if the document is ambiguous as in the second case and it was only stated that the agent owes a certain amount and not as a result of a loan then although the document is problematic if there are profits the agent can give the portion due to the investor.</ref> | |||
===How to Permit an Iska=== | ===How to Permit an Iska=== | ||
