By Rabbi Meir Orlian

Mr. Rubin was facing serious business difficulties that paralyzed his cash flow. Moreover, due to his low credit rating, banks were hesitant to lend to him, and then only at a high interest rate. He decided to turn to relatives, who might be willing to grant him a loan.

“I need to borrow $50,000 for two years to keep my business afloat,” Mr. Rubin said to his Uncle Ben. “Would you consider lending me that sum?”

“I’m willing to consider it,” replied Uncle Ben, “but I don’t have that sum currently available. I need to discuss with you where to get the money from.”

“OK,” said Mr. Rubin. “What are the options?”

“The simplest one is that I take a loan from the bank in my name,” Uncle Ben said to his nephew. “You would then cover the monthly payment, including interest.”

“I also have money invested in a five-year CD,” continued Uncle Ben. “I could withdraw the CD prematurely and use that money. It would entail an early withdrawal penalty, though. I would ask you to cover the penalty and any interest that I would have earned.”

“The third option is to sell shares of stocks or mutual funds,” added Uncle Ben. “The market is rising, though, so I’m hesitant to do that, unless you repay according to the value of the shares then.”

“I appreciate your willingness,” said Mr. Rubin, “but what about ribbis (the prohibition of interest)?”

“What about it?” asked Uncle Ben. “I’m not charging you additional interest in any of these options! All that I ask is that you cover my loss. Is there anything wrong with that?”

“I’m not an expert in the laws of ribbis,” replied Mr. Rubin, “but we can check with Rabbi Dayan.”

“Certainly,” Uncle Ben responded.

“Is there a violation of ribbis in these options?” Uncle Ben asked Rabbi Dayan.

“There is no violation of ribbis for expenses associated with granting the loan,” replied Rabbi Dayan. “For example, the Mishnah (B.B. 167b) teaches that the borrower is responsible for the cost of writing the loan document. This applies even if the loan is in the form of an iska” (C.M. 39:17).

“So I can charge for reimbursement of my losses?” asked Uncle Ben.

“There is a difference, however, between expenses incurred and loss of potential earnings,” continued Rabbi Dayan. “An actual cost or expense, such as the legal fee to draft a loan document or a wire-transfer fee, can be charged to the borrower. The mitzvah of providing a loan does not require you to expend money to grant the loan. However, loss of potential earnings is not allowed and is considered ribbis. Therefore, you may not charge your nephew the remaining interest of the CD or future value of the shares” (Bris Yehudah, 9:1—9).

“What about the penalty for early withdrawal of CD?” asked Uncle Ben.

“Generally, penalty of principal or interest already credited is allowed; interest not yet credited is not,” replied Rabbi Dayan. “A posek should be consulted” (The Laws of Ribbis 4:1—10).

“What about taking a loan and passing on the cost?” asked Uncle Ben.

“Interest payments to a non-Jew for which the lender is responsible may not be ‘passed on’ to the borrower,” replied Rabbi Dayan. “This is not a cost in granting the loan; it relates directly to the delay in repayment. Therefore you cannot take a loan from the bank and have Mr. Rubin pay the interest. Nonetheless, Rav Moshe Feinstein, zt’l, suggests that if the recipient is worthy of tzedakah, you can take the interest payment to the bank from ma’aser kesafim” (Y.D. 168:17; Igros Moshe, Y.D. 3:93).

“If you draft a valid heter iska,” concluded Rabbi Dayan, “some of the expected revenues can be included, especially since the loan is granted for business purposes.”

From The BHI Hotline: Diamond Discount? (Part 2)

Q.  You recently published an article about someone who sold a diamond but charged the customer the list price without deducting the standard 20 to 30 percent. Your ruling was that since the customer did not have the diamond independently appraised immediately after the purchase to confirm that the amount he paid was within market range, he forfeits his right to file an ona’ah claim. Does this ruling apply even if the merchant informed the customer that he charged him the list price for the diamond? Perhaps when the customer is informed that the diamond was already appraised by certified diamond experts, he is not expected to research further and thus did not forfeit his right to file an ona’ah claim.

A. At first glance it seems that the customer should retain the right to claim ona’ah. As we explained, Chazal limit the timeframe a customer has to claim ona’ah to how long it takes to have it appraised by a merchant or relative. If one does not have it appraised within that span of time, he forfeits the right to claim ona’ah. Since he had possession of the item and did not have it appraised, it is his loss if it turns out that he overpaid for the article. However, if it was not possible for him to have the article appraised (oness), he retains the right to file an ona’ah claim (C.M. 227:7).

Poskim add that if the article was appraised but it is subsequently discovered that the appraiser erred, the customer may file an ona’ah claim, since the appraiser’s error is also considered an oness (Nesivos 3:9; Divrei Geonim 5:4, cf. Ohalei Yaakov [Kastro] 115).

Seemingly, in your situation, had the merchant not mentioned how he arrived at his price, we would blame the customer for not having the diamond independently appraised and he thus forgoes his right to file an ona’ah claim. However, when the merchant states that the list price was set by certified diamond appraisers, there is no reason for the customer to think that the appraisal was done in error, and when he realizes that he was overcharged, the customer may file an ona’ah claim.

However, it seems that Chazal’s recognition of an oness is limited to when the appraiser erred or there was no expert available. In such circumstances, Chazal allow the customer to file an ona’ah claim even after an extended period of time, since the passage of time is not interpreted as forgoing the right to file an ona’ah claim.

When the oness occurs because the customer did not think it was necessary to have the article independently appraised since he trusted the merchant’s report of the list price, Chazal do not grant that customer an extension to file his ona’ah claim. There is no precedent to indicate that when the merchant is an expert and trustworthy that the customer should be able to file an ona’ah claim after the limited timeframe expired by claiming that trust in the merchant was the reason he did not have it independently examined sooner.

If a customer decides to trust the merchant, he forgoes his right to file an ona’ah claim. This is certainly true when the customer realizes that he is not familiar with the industry and that there are different methods of calculating the price of a diamond, and thus he should have known better than to blindly trust the merchant.

Money Matters: Manner Of Payment

Based on the writings of Rav Chaim Kohn, shlita

Q. My company is tight on available cash. Can I pay my workers’ salaries in goods and services or company shares?

A. A worker may demand monetary payment; he hires himself out with this understanding and relies on his salary to cover his living expenses. Where appropriate, he is entitled to payment in cash; where the common practice is to pay by check, credit card, or bank deposit/transfer, the practice determines payment. If the employer has no available cash, he is required to make the effort to procure money, even to sell items to raise cash (C.M. 336:2; Shach 332:18, 336:4; Pischei Teshuvah and Aruch HaShulchan 336:1).

However, if the agreement was to pay with an item (or shares, etc.), the employer should pay in accordance, even if no binding kinyan was made on the item. Nonetheless, in the absence of a kinyan, Rema writes that the worker does not acquire the item and the employer can fulfill his legal responsibility with cash (Terumas HaDeshen, Psak #230; C.M. 332:4).

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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