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Taking Interest: Difference between revisions
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→Heter Iska
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* "Witness Clause Heter Iska": The Levush 167:1 writes extensively against the Heter Iska of his time that required bringing witnessed to testify that the investment didn't make the expected gain. He claims that it is a Biblical violation of Ribbit since it is known that with this condition one can specify not to trust any witnessed besides two witnesses on opposite sides of the world and make it impossible for the borrower to be exempt from having to pay the interest. Furthermore, the lender has no right to say that he is certain that the borrower made the gains they expected. Often he knows that it isn't the case and still he is collecting the interest. He distinguishes between ensuring you get back the capital with a clause of having to bring witnesses and that is based on the Trumat Hadeshen 302. However, he would not allow adding a condition to allowing the borrower to exempt himself from paying for the expected gain when he didn't gain money. Shach 167:1 and Taz 167:1 cite and agree with the Levush. Shach adds that one could ask the borrower for a vow that he in fact didn't gain money but he may not ask for witnesses. Taz adds that the witness clause for the capital has to be reasonable to allow for witnesses that could reasonably know about the state of the borrower's business. Lastly, both the Taz and Shach make it obvious that the measure that the Trumat Hadeshen allowed to ensure the return of the capital is only permitted when it is otherwise only a rabbinic interest such as an iska, half loan and half investment, but not for a case of pure loan. | * "Witness Clause Heter Iska": The Levush 167:1 writes extensively against the Heter Iska of his time that required bringing witnessed to testify that the investment didn't make the expected gain. He claims that it is a Biblical violation of Ribbit since it is known that with this condition one can specify not to trust any witnessed besides two witnesses on opposite sides of the world and make it impossible for the borrower to be exempt from having to pay the interest. Furthermore, the lender has no right to say that he is certain that the borrower made the gains they expected. Often he knows that it isn't the case and still he is collecting the interest. He distinguishes between ensuring you get back the capital with a clause of having to bring witnesses and that is based on the Trumat Hadeshen 302. However, he would not allow adding a condition to allowing the borrower to exempt himself from paying for the expected gain when he didn't gain money. Shach 167:1 and Taz 167:1 cite and agree with the Levush. Shach adds that one could ask the borrower for a vow that he in fact didn't gain money but he may not ask for witnesses. Taz adds that the witness clause for the capital has to be reasonable to allow for witnesses that could reasonably know about the state of the borrower's business. Lastly, both the Taz and Shach make it obvious that the measure that the Trumat Hadeshen allowed to ensure the return of the capital is only permitted when it is otherwise only a rabbinic interest such as an iska, half loan and half investment, but not for a case of pure loan. | ||
* "Derisha's Heter Iska": Derisha 167:1 seems to allow setting up an iska half loan and half investment which evolves into a complete loan after the iska reaches a certain percent of gain. The lender needs to pay a small amount to the borrower in order to pay him for his work investing the half investment. Then the lender can buy the "call option" from the borrower that if the investment doesn't reach the percent gain specified then the borrower will pay the difference between the actual price of the investment and the specified price. They can adjust the price of this option to a small amount. However, the Taz 167:1 points out that this approach is complete incorrect and is a violation of Biblical interest. He brings many proofs including the Rosh responsa 88:2 who explicitly rejects this idea. The Shaarei Bracha 167:1 cites the Maharam Chaviv 23 who agrees with the Taz. He also cites the Radvaz 946 who says the same. | * "Derisha's Heter Iska": Derisha 167:1 seems to allow setting up an iska half loan and half investment which evolves into a complete loan after the iska reaches a certain percent of gain. The lender needs to pay a small amount to the borrower in order to pay him for his work investing the half investment. Then the lender can buy the "call option" from the borrower that if the investment doesn't reach the percent gain specified then the borrower will pay the difference between the actual price of the investment and the specified price. They can adjust the price of this option to a small amount. However, the Taz 167:1 points out that this approach is complete incorrect and is a violation of Biblical interest. He brings many proofs including the Rosh responsa 88:2 who explicitly rejects this idea. The Shaarei Bracha 167:1 cites the Maharam Chaviv 23 who agrees with the Taz. He also cites the Radvaz 946 who says the same. | ||
* "Levush's Heter Iska": Shulchan Aruch 177:18 based on the Rivash allows selling specific amount of items at a price that is cheaper than the market price. Then the buyer would stipulate that he wants the seller to deliver the goods by a specific date and if he doesn't do so he has to pay a penalty of a certain amount. Then the buyer would pay upfront and the seller would miss the delivery date and be obligated to return the original payment as well as the penalty. That isn't ribbit since it is a penalty and not a payment for the time value of money. Additionally since it is done completely with sales it isn't considered a loophole around ribbit. For this to work the seller actually needs the property he is selling and the buyer needs to make a legal acquisition of the property ([[kinyan]]). Levush 167:1 adds that the buyer needs to be ready that the seller actually deliver the goods by that date instead of paying the penalty. Taz 167:1 adds that this is forbidden if initially they stated that they want a loan since then the entire deal becomes a loophole to interest. Nekudat Hakesef 167:1 argues with the Taz since this case is completely a sale and therefore isn't an issue of finding a loophole to ribbit even if one originally requested a loan.</ref></p> | * "Levush's Heter Iska": Shulchan Aruch 177:18 based on the Rivash allows selling specific amount of items at a price that is cheaper than the market price. Then the buyer would stipulate that he wants the seller to deliver the goods by a specific date and if he doesn't do so he has to pay a penalty of a certain amount. Then the buyer would pay upfront and the seller would miss the delivery date and be obligated to return the original payment as well as the penalty. That isn't ribbit since it is a penalty and not a payment for the time value of money. Additionally since it is done completely with sales it isn't considered a loophole around ribbit. For this to work the seller actually needs the property he is selling and the buyer needs to make a legal acquisition of the property ([[kinyan]]). Levush 167:1 adds that the buyer needs to be ready that the seller actually deliver the goods by that date instead of paying the penalty. Taz 167:1 adds that this is forbidden if initially they stated that they want a loan since then the entire deal becomes a loophole to interest. Nekudat Hakesef 167:1 argues with the Taz since this case is completely a sale and therefore isn't an issue of finding a loophole to ribbit even if one originally requested a loan. | ||
* Modern Heter Iska: Chelkat Yakov YD 68 explains that it isn't a legal loophole because the parties involved really intend to follow the contract and not violate interest. (In light of the Taz 167:1 and others it is hard to understand this explanation.) Minchat Shlomo 1:27 is troubled how the Heter Iska is permitted but yet allows it completely as is the practice.</ref></p> | |||
==Lending Commodities for Other Commodities== | ==Lending Commodities for Other Commodities== | ||
