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The Elal Pricing Error: A Halachic Analysis By Rabbi Yair Hoffman

The Dan’s Deals regarding the El-Al tickets at 1/3 the price of normal sparked a number of developments:

1] a Selling Frenzy

2] Dan’s Deals Server to fail due to the excess traffic

3] A number of Halachic Shailos were posed to Rabbis as to whether there is an obligation to reverse the sale, since it was due to a mistake.

Below we find one such email:

I was alerted today to the fact that due to what was likely an error, one could purchase round-trip tickets on El Al from JFK to Israel for under $400. This is perhaps 1/3 of what the price should be.

El Al has caught on to the error and fixed it, but in the meanwhile many people were able to take advantage of the error and purchase tickets.

El Al has acknowledged that this was an error, but is bound by law to honor the tickets.

Was it permitted to take advantage of this error?
Are those who purchased tickets obligated to offer to return them to El Al?

In general, once one knows that an item is obviously mispriced, is one allowed to take advantage of that error and purchase additional items, knowing that the vendor will either not know about it or will be compelled by law to honor the price?

If I see that a vending machine says that a can of soda is priced at $1.25 and dispenses a can after I put in $.25, am I allowed to put in more quarters so that I can buy more cans? (Even if we assume that I do not have to return the first can, where I had intended to pay full price, does that mean that now that I know that the machine is mis-programmed that I can buy as many more as I like?

ANSWER:

GENERAL CONCEPT OF ONAAH

We do find a concept in Halacha called Onaas Mamon.  This concept, found in chapter 227 of the Choshain Mishpat section of the Shulchan Aruch, invalidates a sale when the price is either 16.7 % above or below the market value of the item.  Although landed properties would be excluded from this law, it does apply both to movable properties as well intangibles, such as a ticket.

DEBATE BETWEEN BAIS YOSEPH AND SHACH

The halachic authorities debate as to whether the law is applicable when there exists a range of prices and no set market value (See Bais Yoseph CM 209 who says there is no Onaah in such cases while the Bach and Shach state that there is, nonetheless).  At first glance, it may seem that even though secular law may dictate that the sale is valid (we will find out if this is true shortly), there may be an halachic obligation to undo the sale.  Rav Vosner in Shaivet HaLevi Vol. V # 218 concludes that there is Onaah when there is no set price in the market, in accordance with the aforementioned Shach and Bach.

The way airlines price tickets though, deserves a bit of scrutiny.  A certain percentage of tickets are set aside to sell at a certain price.  Another percentage are sold at a higher price.  The system is continued until the very last tickets are sold at a very high price.  One could argue that this pricing structure in and of itself knocks out airline tickets from falling under the category of Onaah, and this, in fact, is the position of a number of Poskim.

THE NOTION OF KIM LI  TO RULE LIKE BAIS YOSEPH

There is also an important concept called “Kim Li k’hanee Poskim” which in essence states that,when holding on to the moneys or items already (Muchzak) a person has the right to say, “I know that the law is in accordance with the Poskim that hold X (See Beis Shmuel CM 68:19).”  In this case, the purchasers of the Dan’s Deals can say that, in their view, the law is in accordance with the Beis Yoseph.”  While one cannot utilize this principle before one has the bought ticket in hand in order to permit the purchase, after one has done so there is no obligation to undo the deal.

OTHER FACTOR TO SAY NO ONAAH

There is another argument, although perhaps not a strong one, that the laws of Onaah do not apply in this case.  Rabbi Yoseph Shaul Nathanson, author of the Shoel UMaishiv (Edition IV 3:137) rules that something sold publicly in an auction is not subject to the laws of Onaah.  A website would probably have the same status on account of the public nature of the sale (see his arguments in the responsa to understand the correlation).

BUT WHEN THERE IS A GENUINE ERROR

While there may be great debate as to whether there is or there isn’t a notion of Onaah where there are no set prices and no official market price, some authorities are of the position that it doesn’t matter, and when there is a mistake in the pricing – it is to be considered Onaah –regardless (See, for example, Pischei Choshain Vol. IV p. 300 paragraph 4 “Uv’chol haOfanim.”)  This last point would negate both of the above arguments.

IS THIS PART OF THE PRICE?

There is a third factor, however, which may be very pertinent here.  If one looks closely at this particular sale, the price of the ticket was not, in fact, below market.  The reason why the total cost of the ticket was so much lower than usual was the fact that the fuel surcharges were not included in the pricing. When someone does not charge an additional fee that is not part of the sale, but rather is construed as an extraneous cost, not charging it would not negate the sale (See Responsa of the Rosh 13:20 for a similar issue).

The situation may be analogous to a store that charges an entrance fee and then makes sales.  If the store owner appointed a person who did not collect the entrance fee and the person did not sneak in, there would be no obligation for the purchaser of the item to pay that entrance fee.

While some may argue that the fuel surcharge is an accounting device, the fact is that technically it appears to be legally construed as an extraneous fee.

Why do they charge these surcharges?  Travel experts list a number of reasons:

1] So they can charge travelers for allegedly “free” frequent flier awards and companion tickets with part of the fare.

2] To make their fares appear much lower than they really are.

3] So they can lower the fare basis on which they pay commissions to travel agents.

4] So they can circumvent the law and raise the fares on routes where fare increases still need some sort of outside approval.

In the United States itself, domestic carriers are not allowed to have these two separate fees, but international carriers are allowed to do so  It is this author’s view, the fact that it is technically not part of the sale itself, has implications both ways too – and one would not be forced to undo the deal from a halachic perspective.

The case of the vending machine would be very different because the moneys placed in the machine facilitate the sale of the item itself.  It would be forbidden to take advantage of that situation, where the machine is giving drinks for 25 cents instead of the regular cost.

GOING BEYOND THE LETTER OF THE LAW

Is there an obligation of going beyond the letter of the law here and return it anyway?

It is this author’s opinion it is recommended that one go beyond the letter of the law when there are individuals who would undergo financial distress in such circumstances.  Here, however, each individual should make the choice himself.

The author can be reached at yairhoffman2@gmail.com

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Posted by on August 8, 2012. Filed under In This Week's Edition,Slider. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

5 Responses to The Elal Pricing Error: A Halachic Analysis By Rabbi Yair Hoffman

  1. mayer freund

    August 8, 2012 at 12:18 pm

    According to the rambam hilchos shabos perek lamed halocho tes vov.
    השבת ועבודת כוכבים ומזלות כל אחת משתיהן שקולה כנגד שאר כל מצות התורה. והשבת היא האות שבין הקב”ה ובינינו לעולם. לפיכך כל העובר על שאר המצות הרי הוא בכלל רשעי ישראל. אבל המחלל שבת בפרהסיא הרי הוא כעובד עבודת כוכבים ומזלות ושניהם כעובדי כוכבים ומזלות לכל דבריהם.
    All halochos of the torah apply only to Jews that are shomer shabos

  2. y k

    August 8, 2012 at 6:32 pm

    going beyond the letter of the law, El Al should offer for those that are willing to pay more a very deep discount that would reflect a cost price, minus a percentage of what they received extra from the tickets that are sold at higher prices.
    in other words, the extra money, divided by the amount of low fare people on the plane.
    basically they don’t loose but they don’t make money.
    after that calculation they may still be making money without getting more money from the people that bought at a low fare if the percentage of low fare travelers is small in any given plane.

  3. Ari Dobner

    August 8, 2012 at 11:54 pm

    As you correctly pointed out, there is a genuine error here and, therefore, the general discussion about the application of Onaah (which applies even to cases where both parties are fully aware of the price discrepancy) is not relevant. There is very little written in Halacha to differentiate between a mutual mistake (mekach ta’ut) and a unilateral mistake, where one party may have innocently relied on the other’s offer and had no reason to believe there was a mistake (see איתמר ורהפטיג, “דברים שבלב” וטעות, דיני ישראל כרך ג’ עמ’ 191). If the ticket buyers had any suspicion whatsoever that the seller’s price quote was a mistake, then the sale is voidable as a mekach ta’ut.
    The entire discussion also assumes that a kinyan was completed and not a mere agreement to sell or order to buy. If this is not the case (e.g., perhaps if the tickets weren’t issued yet), El Al could probably could back out of the sale with impunity.
    I would also point out that the discussion of Kim Li is not relevant to the ethical question of whether one SHOULD hold El Al to the sale. It is only relevant to the legal (Hoshen Mishpat) question whether a Bet Din, in theory, can force El Al to honor the sale.

  4. Lou

    August 9, 2012 at 11:16 pm

    Easy Answer – since it was a mistake, upon that knowledge anyone holding a ticket , should A) return it or B) pay up the portion of the full price that should have been charged . Same a buying an item for $10 paying with a $20 dollar bill and clerk giving you back $15 change .What is the right thing to do ? Easy -upon realizing the mistake -you give $5 back .

  5. Lou

    August 9, 2012 at 11:26 pm

    Any doubts can be easily removed by simply putting yourself in the position of whoever was responsible for the mistake – would you not hope that everyone would respond in such a way ?