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Gas Gouge

By Rabbi Meir Orlian

Hurricane Sandy, in addition to causing water damage and power outages, also severely disrupted fuel distribution; very few stations had gas. The lines of cars waiting stretched many blocks, and even the lines of people holding jerry cans stretched way down the block!

Noach waited for four hours to fill up. He was pleasantly surprised to see that the price of gasoline remained the same as before the hurricane, even though this was the only operational gas station for miles around. The government had imposed controls to prevent price gouging, requiring the stations to maintain their former prices.

Later in the week, Noach met Mr. Gassner, who operated the gas station. “It was considerate of the government to freeze the gasoline prices,” Noach commented.

Mr. Gassner, however, was furious! “It wasn’t fair that the government required us to keep regular prices,” he complained. “People went crazy to buy even a small amount of gas, and the supply was so limited. Based on supply and demand, I could have easily charged three times the price. People would have been happy to get anything at all!”

Noach was surprised to hear this view. “It would be interesting to hear what halacha has to say about the price freeze,” he said to Mr. Gassner.

“Do you really think halacha has something to say about this?” asked Mr. Gassner.

“I’m sure it does,” said Noach. “Let’s ask Rabbi Dayan.”

“Is there any source in halacha for government regulation of prices?” Mr. Gassner asked Rabbi Dayan when they consulted him.

“This case is reminiscent of a fascinating halacha,” said Rabbi Dayan, “which emphasizes the need for control of the market on critical items.”

“The Gemara (Bava Basra 90a) states that a person should not earn a profit of more than one-sixth,” explained Rabbi Dayan. “This means that if the item cost him $100, he should not sell it for more than $120, which would provide a profit greater than one-sixth of the sale. This regulation is limited by the Rambam and Shulchan Aruch to items that entail chayei nefesh (staple food items), such as wine, oil, and flour” (C.M. 231:20; Pischei Choshen, Ona’ah 14:[28]).

“But what about the store’s overhead and labor costs?” asked Noach. “If a store were to charge only 20% above its purchase cost, it would never break even, forget about a profit!”

“The overhead is added to the cost, as well as basic consideration for time and labor,” explained Rabbi Dayan. “Thus, for example, if the food itself cost $100, the proportional share of overhead is $20, and basic time and labor amounts to another $5, the base cost is $125, and the store would be entitled to sell it for $150.”

“But if other, non-Jewish, stores don’t follow this halacha, it seems unfair to limit the individual’s profit,” argued Mr. Gassner. “They easily mark up 50 to 100 percent!”

“This halacha applies only when beis din has control over the entire market and can force all the sellers to follow suit,” said Rabbi Dayan. “However, if other stores sell as they please, an individual storeowner is not required to curtail his profit margin.”

“What about other items?” asked Noach. “Is there any profit limitation for gasoline?”

“The Sma (231:36) explains that staple food items have a one-sixth limitation, as I mentioned,” replied Rabbi Dayan. “Items related to food preparation can be marked up 100% of the adjusted cost, and there is no mandated limit for items unrelated to food.”

“So would halacha view the price freeze as a fair regulation?” asked Mr. Gassner.

“As I said, halacha directly limits the profit margin only on food items in a primarily Jewish community,” answered Rabbi Dayan. “However, it stresses the importance of legislative control to ensure that staple items are affordable. The Shulchan Aruch adds that beis din is permitted to punish one who price-gouges” (231:21,27).

“Given the critical need for gasoline under the circumstances,” concluded Rabbi Dayan, “it seems appropriate that the government imposed a price freeze to prevent price gouging on gas.”

Unusually Strong

Submitted by E. T.

Q. After the hurricane, we received many questions involving objects that caused damage as they were blown into a neighbor’s yard, as well as trees falling onto a neighbor’s property. Is one liable if his object caused damage to a neighbor’s property?

A. A person is responsible to ensure that his possessions do not damage another person’s property. This responsibility applies if his object causes damage because of his negligence (peshiah). If, due to circumstances beyond one’s control, his object damaged another’s property, he is exempt from liability. This distinction is best expressed in the following case:

If one placed an object on his roof and it blew off in an ordinary wind (ru’ach metzuyah), causing damage to another’s possessions, the owner of the object is liable for the damages. If, however, the object was blown off by an unusually strong wind (ruach she’einah metzuyah), he is exempt (C.M. 411:1). The reason the owner is exempt in the latter case is that he is not expected to anticipate an unusually strong wind. Therefore, he is not expected to have secured his item so that it should not fall and inflict damage. For this reason, when a strong wind blows down a tree, causing damage to a neighbor’s possessions, the owner of the tree is not liable, since the damage was caused by circumstances beyond his control.

The only circumstance in which one is liable is if the tree was in danger of falling and the owner was given legal notice of a deadline to remove the tree by a competent legal authority, yet failed to do so (see C. M. 416:1).

The halacha regarding movable objects employs a different set of parameters. In contrast to fixed items like a tree or wall that do not pose a probable hazard, it is necessary to secure movable objects as a precaution so that they should not be swept up by the wind and cause damage.

Moreover, there are generally reports of an upcoming storm days, if not a week or more, in advance, and people know that strong winds will blow objects that are left outside and not secured. Therefore, if someone leaves personal belongings outside when a storm that could move those objects is approaching, the owner is responsible if the wind takes those objects and damages another’s property.

Although such a wind is unusual (einah metzuyah), since it was anticipated, the owner is liable. The damage caused is a subset of eish (“fire”), whose defining characteristic is that another force (wind) contributes to the damaging act of the fire.

Similarly, if the wind throws the unsecured object onto a neighbor’s property, causing damage to movable or fixed objects, the owner is liable for the damage (C. M. 390:10; see also Shitah Mekubetzes 60a d.h. “Rav Ashi” and Nachalas Dovid, B.K. 19b.)

Money Matters:

Damages #4

Q. While renovating my property, may I break a hole in my neighbor’s fence without his permission, with intention to repair it or pay for its repair later?

A. The Shulchan Aruch writes: “It is forbidden to damage another’s property” (C.M. 378:1). Some consider damage a form of theft. Just as one may not steal with the intention of repaying (348:1; 359:2), one may not damage with the intention of repaying. Some even view a person who intentionally damages as wicked and disqualified from giving testimony.

Others derive the prohibition to damage from the obligation to return lost items. If we are required to protect another’s property and return it to him, all the more so (kal v’chomer) we may not damage it (see Pischei Choshen, Nezikin 1:[1]).

Furthermore, it is prohibited to wantonly damage or destroy even one’s own property. This is included in the prohibition of bal tashchis (“do not destroy”). However, if done for a purpose or need, this is permissible (P.C., Nezikin 1:2–3).

Unnecessarily cutting down fruit-bearing trees involves a clear violation of bal tashchis and a potential danger. It is permissible only in certain circumstances; a rav should be consulted (Pischei Teshuvah, Y.D. 116:6). v

This article is intended for learning purposes and not to be relied upon halacha l’maaseh. There are also issues of dina d’malchusa to consider in actual cases.

Rabbi Meir Orlian is a faculty member of the Business Halacha Institute, which is headed by HaRav Chaim Kohn, shlita, a noted dayan. For questions regarding business halacha issues, or to bring a BHI lecturer to your business or shul, please call the confidential hotline at 877-845-8455 or e‑mail ask@businesshalacha.com. To receive BHI’s free newsletter, Business Weekly, send an e‑mail to subscribe@businesshalacha.com.

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Posted by on December 1, 2012. Filed under In This Week's Edition. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.