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Corporations in Halacha     Issue #: Business Structure

https://dinonline.org/2014/03/20/corporations-in-halachah/

https://dinonline.org/2014/03/20/corporations-in-halachah/

Drafted n' Duped!     Issue #: 099

Drafted n' Duped!   With apartments in high demand, Ray Field saw the following advertisement i ...

Drafted n' Duped!

 

With apartments in high demand, Ray Field saw the following advertisement in the DC area Classifieds. "Airy, comfortable, spacious apt. contact present tenant Joe Berger ... must buy existing used furniture.

 

September 14th 1969... drafted! Dr. Ray Field, a young cardiologist in  NY Beth Israel Medical was summoned to provide ongoing care to US army veterans in the Armed Forces Retirement Home Washington Campus.

 

Incredibly, Ray and his wife Carol received permission to live off campus, in walking distance from the nearby fledgling Summit Hill Ahavas Torah Synagogue.

 

Desperate for a place to live, Ray agreed to purchase the existing furniture from Joe Berger for $2,000 (buying power of $12,314.11 in 2011 see CPI Inflation calculator) . Berger then put Ray in contact with the landlord.

 

Ray forwarded 12 head checks to the landlord and intended to meet Berger as they pulled in to their new home.

 

Excited, though apprehensive about their new beginnings, Ray and Carol pulled up to their new home in Summit Hill, knocked on the door and were warmly greeted by Berger.

 

Carol took one look at the furniture and almost fainted! "Joe!  This furniture is ten years old!  It's not worth more than $500! We're taking the apartment and here's $500 for the furniture."

 

"Mrs. Field, Indeed this furniture is ten years old. But, I moved in here a year ago and the previous tenant forced me to purchase this furniture from him for $2000. I'm just passing down the rip off  to you..."

                                                    

 

 

 What's the Law? 

  

 

 

The Answer

 

The Fields may take the apartment and do not have to uphold their verbal commitment with the previous tenant regarding the furniture (see detailed explanation).

 

 

Detailed Explanation

  

Joe Berger overcharged the Field's four times the market value simply because he was ripped off last year. 

This episode transpired in 1969. There were no digital imaging, e-mail, etc. There was no way for the Fields to have "seen" the merchandise before their consent. Instead, the Field's reasonably assumed that while the furniture was advertised as used, the $2000 was a fair market value for the quality they were to receive .

 

In addition, the difference in price and true value was so immense that it could be viewed as though the Field's did not receive the type of merchandise they agreed to purchase. As such, the Field's need not "keep their end of the deal either" [Choshen Mishpat 233: 1].

 

Joe Berger wished to monopolize on the  opportunity. He was not appointed as an agent for his landlord. Instead, the Field's ultimately dealt directly with their landlord.

Dollar Ditch!     Issue #: 097

Dollar Ditch!    After marrying off their youngest daughter, the Fischer's from Lawrence f ...

Dollar Ditch!

  

After marrying off their youngest daughter, the Fischer's from Lawrence focused on actualizing their life-long dream of emigrating to Israel. Dr. Arnold Fischer planned to continue his practice on a part-time basis as a diagnostic radiologist for Beth Israel Medical Center, while Mrs. Fischer was set on volunteering as a social worker for terror victim families.

The two decided to take a pilot trip for year and rent a studio apartment on Shimshon Street in Ramat Beit Shemesh, as they shopped around for a suitable neighborhood and villa to purchase.

While planning to move in on August 19th , 2009, the Fischer's signed a lease with Doron Nadlan for $1,000 a month. They signed three months in advance on May 18th , 2009 and forwarded a security check in dollars as well. On May 18th , 2009 the shekel -dollar exchange rate was 4.169 NIS to the dollar.

As scheduled, the Fischer's moved in on August 19th , and while overcoming numerous initial challenges began to acclimate to their new environment.

On Oct. 15th, 2009 Dr. Fischer received the following shocking email from Nadlan.

 

" Dear Dr. and Mrs. Fischer


 As the shekel-dollar exchange rate unexpectedly plummeted to 3.69 NIS to the dollar, be informed that I am switching your rent over to shekels and expect 4169 NIS a month."


 Doron Nadlan

 

What's the Law? 

 

 

The Answer

 

Nadlan may not change the rental terms in midst of the contract.

 

Detailed Explanation

 

Dollar Ditch! Implicates the following four laws.

1. Land is legally acquired via four mediums; three of which are the transfer of money or effecting a contract or beginning of usage.

2. Real-Estate rentals and real-estate loans are like a temporary sale and are secured through the same mediums [Choshen Mishpat 190: 1, 195: 9].

3. After the prescribed legal acquisition means is met, a party may generally not reverse on the deal [Choshen Mishpat 189: 1].

4. When a real-estate rental has been legally secured for a defined period of time, a landlord may not adjust the terms of the lease during the tenure of the contract even if the price fluctuates drastically [Choshen Mishpat 312: 9, 10].

Application

 

The Fischer's secured their apartment rental or temporary sale by signing a contract. In fact, they even paid money and began using the apartment. The contract required the Fischer's to pay their rent in dollars. Nadlan may not adjust the terms of the contract on the Fischer's even if the shekel-dollar exchange plummeted in the interim.

 

It's A Boy     Issue #: 096

  Its a Boy!     Mrs. Greenfield hired Doula Fried, to assist her in delivering her n ...

 

Its a Boy!

 

 

Mrs. Greenfield hired Doula Fried, to assist her in delivering her newborn. Early, Tuesday morning, Mrs. Greenfield sensed that the awaited time was imminently approaching. In general though, Mrs. Greenfield upheld a history of elongated ordeals.

In contact throughout the morning with Duola Fried; she was assured that history was repeating itself and time was on her side. The thought of hours of work simply tired her out. ...when suddenly her room was filled with the delightful charm of promising life. Doula Fried missed the birth!

Is Mrs. Greenfield required to pay Duola Fried?

What is the Law?

The Answer

Unless Duola Fried has a specific policy, Mrs. Greenfield is exempt from paying Fried (see detailed explanation).

 

Detailed Explanation

 

Background

 

Mrs. Greenfield hired Duola Fried to perform a service. Although Duolas often provide guidance to their clients far before rendering the actual service, Duolas generally charge only for aiding the delivery. In Mrs. Greenfield's case, Duola Fried did not even begin providing her "chargeable" services nor did she begin traveling to the "work site". Secondly, there is a calculated risk in the field, that the Duola may well miss the birth.

 

*

 

It's a Boy implicates the following four laws.

1. An employer who irresponsibly cancels the post after a laborer either turned down alternative work (and can no longer find replacement work) or else, began working or traveling to the job site (even if he/she did not turn down alternative employment) is required to compensate the laborer for the wages he/she expected to earn [Choshen Mishpat 333: 2; 334:1].

2. An employee who prefers to earn reduced wages and remain idle, rather than work hard and earn more, can only claim that "reduced fair" from the employer [Choshen Mishpat 333: 2; 334:1].  

3. When new circumstances render the job unnecessary, an employer is absolved from compensating a laborer for services not received, if the laborer could have responsibly foreseen  such occurrences [Choshen Mishpat 334: 1].

4. An employer who must cancel the post due to unexpected circumstances need not pay for services not received (though must reimburse him/her for expenditures invested by the employee en route to the work site) [Nesivos Hamishpat 333:5].  

 Application

Doula Fried did not invest expenditures, begin traveling, or begin rendering services. Most of all, Doula could have foreseen the eventuality of missing the birth. Mrs. Greenfield is absolved from paying her for her services unless there is a predetermined protocol for such eventualities.

 

To Save A Life!     Issue #: 122

Issue 122.pdf (1.20 mb) To Save A Life! On a class trip to a New York school, seven year old Aaron f ...

Issue 122.pdf (1.20 mb)

To Save A Life!

On a class trip to a New York school, seven year old Aaron from Chicago suddenly began wheezing and could not open his eyes. His teacher, Mrs. Rhine instantly scrambled for his epi-pen but could not find it.

In lightening speed, with a metal chair she pulled the locked medicine cabinet off the wall, found a pen and saved Aaron’s life. Medical assistance was swift to follow.  Mrs. Rhine broke the school chair and  medicine cabinet.

Thousands were being deported by the day. Hundreds of thousands of Jewish lives could have been saved for ransom.

While many tragically ignored their plight, Rav Shlomo Halberstam, Grand Rabbi of Bobov extended every effort he could to save his brethren. Unable to secure significant donations for the cause; by the end of the War, he had accrued staggering debts. [A True Story].

 

Must Mrs. Rhine compensate the host school for the damage?

Did Rav Halberstam have to repay his loans? 



What’s the Law?

 

The Answer:                                           

Mrs. Rhine does not need to compensate the host school.

Rabbi Halberstam must pay his debts.

 

Detailed Explanation

 

 To Save A Life invokes the following halachos

 

  1. To ensure that the common folk would not fear endeavoring saving a third party in mortal distress, the sages instituted a special dispensation from paying for collateral damages the savior may cause en route to saving a victim’s life [Maseches Bava Kama 117b, Choshen Mishpat 380: 3]. (See further issues as per the liabilities of a paid practitioner, and one saving him/herself; both of whom do not generally need an additional incentive to involve themselves in the rescue efforts. They must subsequently compensate the third party.)

 

  1. Though R’ Yaakov ben Yaakov Moshe Lorberbaum of Lissa (1760-1832) in his Nesivos Hamishpat (340: 6) understands this collateral liability dispensation to incorporate liabilities stemming from contractual law (i.e. borrowing ammunition to protect a third party from an offender and losing it during the clash), as well as from collateral damages; Rav Moshe Feinstein dictated unequivocally that the Talmud’s dispensation is restricted to collateral damages [Igros Moshe C.M. II 63].
  2. However, any liabilities incurred during the rescue efforts resulting from theft, contractual (i.e. loans) or property (bailment’s, or shmira) law remains in effect.

 

Application

Rav Feinstein ruled that Rav Halberstam determination to pay his creditors was not an act of piety but in-fact was required by law, regardless of his original humanitarian motives.

 

Mrs. Rhine damaged the medicine cabinet and chair. As she was endeavoring to save Aaron’s life, she is absolved. 

 

Theoretically, in-line with R. Feinstein’s verdict, she would be have been required to repay the host school for using the epi-pen, if not for the fact that the epi-pen was obviously earmarked for such usage.

Downtown Dentures & Rolex or Buick     Issue #: Special Class 01

Downtown Dentures Class Handout with Source Material Downtown Dentures Esophagogastroduodenoscopy (E ...

Downtown Dentures Class Handout with Source Material

Downtown Dentures


Esophagogastroduodenoscopy (EGD) is a test to examine the lining of the esophagus stomach, and first part of the small intestine. It is done with a small camera (flexible endoscope) that is inserted down the throat.

The patient receives a sedative and a painkiller. A local anesthetic may be sprayed into the mouth to prevent coughing or gagging when the endoscope is inserted. Dentures must be removed."

Grandma was sent home after the procedure, and her health slowly began to improve. However, the hospital sent her home without her dentures. The hospital verbally agreed to pay for new ones.

The family commissioned their dentist to begin constructing new ones; projecting to complete the job in a week in a half.

In the middle of the week, the hospital called Grandma's home and told her that her teeth were located in a nursing home, downtown. "The nurse inadvertently sent them home with another patient. You'll receive your old teeth in two days, but we refuse to pay for the construction of the new ones."

 

Who pays the dentist?

Rolex or Buick!


Few would imagine that the 1989 graduating class of Harvard Business School would develop into one of the most celebrated graduating classes of the era. As exemplary role models, who positively influenced both business and society; the class of 1989 already boasted numerous Alumni Achievement Awardees.

 Today's leading executives and activists were yesterday's determined neophytes. Brian Green, a leading executive of Morgan Stanley and an 1989 graduate, remembers his first interview and its aftermath. 

"Forever a genuine comrade, my fellow classmate Fred Bernstein, prayed hard that I would get the job.  A selfless young man - he would rejoice when his peers succeeded.

 Determined but equally nervous, I wished to make a striking impression... Fred looked me over and exclaimed, 'Brian, your presentation is great, but you will steal the show if you came in wearing a gold watch. Here, take my Rolex for the interview. I will be out of town for the next few days. Give it back to me when I return. 

Thank G-d I got the job. The supervisor told me that I made an outstanding impression and would begin my career in but one month's time.  I felt sincerely indebted to Bernstein.

Throughout my college tenure, I had been saving up for my first Buick. I was eager to make my purchase in time for my first job. Bernstein returned a week later, but to my misfortune, I could not locate the watch. As much as I searched through my belongings, the Rolex did not appear.

 My dream was dashed! Painfully, I dug into my purse, liquidated my savings and issued  to Bernstein two checks for $3000.

 Fred cashed the checks and purchased a similar model from Tourneau.

 As I cycled on my Schwinn each day to work, my mind soared back to my dream Buick.

 Four months later, when relocating to a new apartment, the Rolex appeared. "Eureka! My Buick may be a reality soon after all", I thought.  Excited to return the watch and reclaim my cash, I contacted Bernstein and told him, I'll be over in ten minutes...'Not so fast replied Fred..

 

Must Fred accept the watch and return Brian's cash?

May Brian appear to an interview wearing Fred's Rolex?

 

 What’s the Halacha?

Downtown Dentures

Downtown Dentures invokes the following laws:

1)      A paid trustee (shomer sachar) is liable for negligence, losses or theft which he/she could have prevented [Choshen Mishpat 303:2].

 

2)     "A depositor delivered jewelry to a trustee (shomer) for safekeeping. Upon the depositor’s return, the shomer fails to locate the jewelry. The court requires the shomer to compensate the depositor for the value of the jewelry. The shomer defaulted and the court mortgaged the shomer’s real-estate to the depositor. Subsequently, the shomer found the jewelry in his possession.

 

We deem the compensation a faux - pas (blunder) and the shomer retains the right to return the jewelry and retrieve his or her real-estate from the depositor" [Bava Metzia 35a, Choshen Mishpat 103: 11].

 

3)     Generally, once an employee begins the commissioned work, the employer may not cancel the job without compensating the employee. However, as a result of an unforeseeable happenstance, where the work serves no function, an employer may cancel the commissioned work midway. The employer though, is required to pay for the work that was performed [Choshen Mishpat 335: 2].

 

4)      If B crafted a product under commission from A, A must pay for the product regardless of whether he/she subsequently needs it (unless b can easily sell it to someone else) [Nesivos 333: 15].

 

5)     A verbally committed to meet B in court on a particular day.  B paid out money to get there. A was negligent and did not show.  A must compensate B for the reasonable and foreseeable expenditures he/she spent as a result of relying on A’s word [Choshen Mishpat §14: 5 Rema].

 

Application

The hospital assumed the responsibilities of a paid trustee. They were negligent with the dentures and inadvertently sent them elsewhere. While they would be required to replace the dentures; subsequently returning the actual ones suffices.

Grandma commissioned the dentist to craft new dentures. The fact that she does not need them anymore is inconsequential. She would be required to pay the dentist for his work. (Parenthetically, having a spare pair of dentures is not uncommon. It is difficult to argue that making a second pair serves no function. )

Nonetheless, Grandma commissioned the dentist after responsibly relying on the hospital’s verbal commitment to pay.

As a result; says Dayan Chaim Kohn, the hospital becomes obligated to pay, even if the family would have decided to commission new ones regardless of the hospital’s promise.

The Answer: Downtown Dentures

Grandma must pay the dentist, but the hospital is required to pay Grandma.

 

 *

The Halachos: Rolex or Buick

Rolex or Buick! implicates two distinct issues

 

v  Is Brian entitled to a recourse to reclaim his money?

v  Is Brian guilty of "stealing" the heart of his prospective supervisor?

 

 

Let us focus on each issue independently.

I. Is Brian entitled to a recourse to reclaim his money?

Introduction: Here is a quote from Britannica Encyclopedia (Mortgage Law).

"If the mortgagor failed to repay the debt by the time that was specified in the mortgage, the land became the mortgagee's absolutely....In the 16th and 17th centuries, however, the English equity courts intervened on the side of the mortgagor. Equity first gave the mortgagor a right to redeem the land by paying the amount that was owing, even after he had defaulted on the debt..."

Consider the following albeit different, yet similar Talmudic scenario.

"A depositor delivered jewelry to a shomer (custodian) for safekeeping. Upon the depositor’s  return, the shomer fails to locate the jewelry. The court requires the shomer to compensate the depositor for the value of the jewelry. The shomer defaulted and the court mortgaged the shomer ‘s real-estate to the depositor.  Subsequently, the shomer found the jewelry in his possession. We deem the compensation a faux - pas (blunder) and the shomer retains the right to redeem his or her real estate from the depositor." [Bava Metzia 35a, Choshen Mishpat 103: 11]

So, the progressiveness of sixteenth and seventeenth century English Equity courts, was in fact a rediscovery of sorts of a theory directly reflecting the age-old Talmudic concept.

"Although a debtor compensated the creditor with alternative means, he or she does not necessarily lose the right to reclaim the "alternative compensation" with due payment at a later date."

Now, while generally, Talmudic Law only obligates the creditor/ depositor  to comply with such compulsory recourse in an instance of faux - pas, and not in an instance of blatant default of payment, we will allow for history play out its course and see if Anglo-American Law progresses further in the direction it seems to be taking.

Application

Must Fred accept the watch and return Brian's cash?

 

As a shomer, Brian was responsible to return the goods Fred deposited by him. Monetary compensation as a form of alternative compensation is due should Brian not produce the deposit. In our faux - pas situation, where Brian subsequently discovered the deposit amongst his belongings, he may return it to Fred and require Fred to return to him his cash.

 

The Answer:

Fred must accept the watch and return Brian's cash. Rolex or Buick? Buick!

II Is Brian guilty of "stealing" the heart of his prospective supervisor?

Background: 1. Deceiving any human being, or Geneivas Da’as, is a form of theft and is a biblical prohibition [Maseches Chulin 93b].

  1. Additionally, tricking any human being even without causing him or her a financial loss or damage is a rabbinical prohibition.

This includes garnering undeserved praise or feelings of gratitude through feigning a false impression of benevolence and virtue.

Explanation:

Just as one may not steal another's money one may not manipulate another's feelings of gratitude and steal his or her heart [Shulchan Aruch HaRav: Hilchos Ona'ah U'Genevah 11, 12].

Exception:

Creating an atmosphere within which the victim is to blame for not thinking responsibly is not included in these prohibitions [Maseches Chulin 93b].

Application

May Brian appear to an interview wearing Fred's Rolex?

While "dressing the part" clearly makes a striking impression, which might positively influence the outcome of an interview, it is widely accepted for a prospective candidate to groom himself or herself fashionably for such a meeting. A supervisor's responsibility is to appreciate that candidates portray themselves in a superior manner within reason of their means and see beyond the outside trimmings.

Consequently, sporting finer wear for an interview does not convey a false impression of the manner in which the candidate appears on a day-to-day basis.

Instead, the supervisor suffers the consequences of his or her failure to consider these factors accordingly.

Hence, as a Rolex was within reason of Brian's means, although he did not own one, he may appear to his interview sporting Fred's Rolex.

The Answer

Yes, if wearing it is “within his means”.

Oil Surge     Issue #: 161b

Oil Surge The landlord promised to cover heating expenses for the duration of the three year contrac ...

Oil Surge

The landlord promised to cover heating expenses for the duration of the three year contract. During the first winter, the price of oil increased to exceed the fixed rental fee.

 

Ø  Does the landlord have recourse?

What's the Law?

The Answer

Both parties may reconsider the rental contract.

 

Detailed Explanation


Oil Surge invokes the following laws.

 

1)      A defined-time contract empowers a tenant to purchase the apartment’s usage rights for the duration of the contract.

 

Accordingly, the subsequent increase in market value of the apartment’s utility cannot benefit the landlord while the tenant temporarily owns the apartment’s utility [Teshuvos HaRosh 1: 6].

 

2)       Hence, the increase of rental market rates or the apartment’s value during a defined-time rental term does not permit the landlord to breach the contract and raise the rent [Choshen Mishpat 312: 10].

The tenant however, does not own the promised fuel. Should the cost of the promised fuel increase dramatically, we must determine whether the landlord meant to provide fuel regardless of the price.

3)      A landowner sold a field and stipulated that he/she will stand behind the sale if anything happens to the purchased land, whereby making it a bad investment.

If a gangster who was pursuing the seller seized it from the buyer, the seller must compensate the buyer. However, if a hurricane uncharacteristically destroyed the field, the seller is absolved from compensating the buyer. Such improbable occurrences did not enter the mind of the seller when he/she promised to stand behind his/her sale [Choshen Mishpat 225:3].

 

4)      One is not required to support the children his wife brings in to the marriage. Nonetheless, if a man promises to feed his wife’s daughter for five years, he is required to do so even if the cost of food increases during the interim [Even Ha’Ezer 114:1].

 

5)      What if the price of food uncharacteristically increased during the five year interim?

 

 Taz rules that the husband may reconsider his commitment.

 

While food is expected to increase in price over time, the husband may claim that he never meant to accept the responsibility for an uncharacteristic increase of food prices; [similar to the aforementioned land owner].

 

6)      Beis Meir contends with Taz.

Indeed, when a landowner makes a broad commitment (accepting upon him/herself to stand behind the sale, “should anything” happen), we assume the landowner did not take all possible variables into consideration, but instead we view his/her commitment to be limited to happenstances that one normally expects.

 

However, when the husband made a specific commitment i.e. to feed his wife’s daughter for five years, we assume that he considered all eventualities in his commitment. As such, he would be required to feed her even if the costs of food dramatically increased [Sh”ut Beis Meir Even Ha’Ezer 114:1].

 

7)      Nachlas Tzvi wonders if when a landlord made a specific commitment to provide fuel, if he considered to do so under all eventualities (like Beis Meir) or not (like Taz) [Choshen Mishpat 312:10].

 

8)      It is clear that the tenant would not agree to pay the initially agreed upon rent if the landlord fails to provide the fuel [Nachlas Tzvi Choshen Mishpat 312:10].

Application

Nachlas Tzvi rules that while we cannot compel the landlord to continue providing fuel if fuel prices unexpectedly surge, we equally cannot compel the tenant to continue paying rent under such conditions.  Should the landlord wish to begin charging the tenant for fuel, the tenant is permitted to leave the apartment or else the tenant may remain in the apartment without receiving fuel for a fare discounted price [Nachlas Tzvi 312: 10].

Contingent Commitments?     Issue #: 160

Issue 160.pdf (1.11 mb) Contingent Commitments? Alexander Klein owned numerous high-end apartment bu ...

Issue 160.pdf (1.11 mb)

Contingent Commitments?

Alexander Klein owned numerous high-end apartment buildings on Ft. Washington Avenue in Upper Manhattan. A two-bedroom apartment averaged at $1800 a month. 
 
Klein though, signed a discounted three-year lease with Moshe Morrison; his grandson-in-law, for a nominal charge of $200 a month. 
 
Two months later; Klein began upgrading the kitchens in Moshe's building. He planned on raising rents for apartments with new kitchens by $100 a month. 
 
The granite countertops and stainless steel appliances greatly enhanced Moshe and Daniella's steal-of -a-deal. The lease unfortunately, outlived their marriage. When Klein's granddaughter returned to her parent's home after ten months, Alex made three demands on Moshe: 1) to meet market value and pay $1600 more a month till the remainder of the three-year lease. 2) to pay $1600 retroactively from the first month 3) to pay an additional $100 a month for the months he benefitted from a new kitchen.
 
Moshe argued that the contract fixed the lease at $200 a month.
 

What's the Law?

 

The Answer

Alex may not retroactively charge Moshe for the true market value, but henceforth, according to Torah Law - barring local custom - may null the lease. 

 

Detailed Explanation

 

Contingent Commitments invokes the following Halachos.

In order to Halachically condition the effectiveness of a valid transaction unto a defined factor, the conditioning party needs to clarify beyond reasonable doubt that the effectiveness thereof is strictly contingent upon the prescribed factor and will be conversely ineffective if the factor is not duly met. 

Otherwise; simply mentioning a factor at the time of negotiation, merely indicates the party's preference, but lacks the legal ability to influence the effectiveness of the transaction if the factor is not met.

The Torah's prototype for a transaction's condition influencing its effectiveness is the double- ended deal which Moshe struck with the Tribes of Reuben and Gad who requested their inheritance in Transjordan instead of within Israel's mainland. 

 וַיֹּאמֶר מֹשֶׁה אֲלֵהֶם אִם יַעַבְרוּ בְנֵי גָד וּבְנֵי רְאוּבֵן אִתְּכֶם אֶת הַיַּרְדֵּן כָּל חָלוּץ לַמִּלְחָמָה לִפְנֵי יְ-הֹ-וָ-ה וְנִכְבְּשָׁה הָאָרֶץ לִפְנֵיכֶם וּנְתַתֶּם לָהֶם אֶת אֶרֶץ הַגִּלְעָד לַאֲחֻזָּה:  וְאִם לֹא יַעַבְרוּ חֲלוּצִים אִתְּכֶם וְנֹאחֲזוּ בְתֹכְכֶם בְּאֶרֶץ כְּנָעַן

"If the children of Gad and Reuven will cross the Jordan before you - everyone armed for battle...you shall give them the land of Gilead as a heritage. 

But if they do not cross over armed with you...they will take their heritage among you in the land of Canaan" [Bamidbar 32: 29, 30]. 

By clearly clarifying the converse as well; that the transaction would be ineffective if the condition was not met; Moshe left no room for misunderstanding that his condition to their receiving their inheritance in Transjordan was more than a preference; it was vital to the effectiveness of the deal.

Accordingly, verbal transaction stipulations must generally mimic this double-ended deal to be effective. Nonetheless, such a double-ended deal is unnecessary, when surrounding circumstances unquestionably explain the full intent of the stipulating party.

A case in point:

Background

While people sell moveable objects for a myriad of reasons; unless someone is in the real estate business; people generally do not sell their real-estate if not for extreme circumstances.
 
A sold his real- estate while informing his/her buyer that the sale was motivated by his/her intention to relocate to Israel. Compelling circumstances caused him/her to cancel his/her plans to relocate.

As it was clear beyond questionable doubt that he/she sold the real-estate due to move to Israel, if the plans fall through - barring local custom -, Torah law permits A to repossess his/her real estate, although he/she did not express the converse "If I do not make Aliya, the sale is invalid."

Ketzos Hachoshen [Choshen Mishpat 319: 1] points out that real-estate rentals are similar to the sale of moveable objects. As it is customary for people to rent out their premises for a myriad of reasons; in order to pin the effectiveness of the rental agreement on a specific factor (i.e. making Aliya) the landlord would need to express the converse as well, ( i.e. if I fail to make Aliya, the rental is invalid).

Otherwise, whether or not the landlord succeeds in making Aliya, the rental agreement could not be revoked.

Nesivos [Choshen Mishpat 312: Rema 9: Nesivos 7] points out however, that renting out real-estate which is not on the rental market is similar to the sale of real estate; only done for extreme purposes.

As such, barring local custom- if plans to relocate to Israel would motivate a homeowner to rent out his personal home, he/she can reposes the home should the plans fail, even if the nature of the stipulation did not mimic Reuben and Gad's.

Application:
While it is not uncommon for landlords to give reductions for a myriad of reasons, it was clear beyond reasonable doubt that the drastic reduction in rental price was due to Moshe's relationship with Alex.

In light of the aforementioned Nesivos, Alex would not need to have expressed the converse to Moshe (i.e. should the marriage fail; I will charge you in full.) Instead, should the marriage fail, Alex may null the agreement henceforth, and approach Moshe with an ultimatum, "Pay from now on like market value including for the kitchen upgrade, or leave." Alex may not however, charge Moshe retroactively.

Heads You Win, Tails I Lose?     Issue #: 159

Issue 159.pdf (726.17 kb) Heads You Win, Tails I Lose? Settling in a cozy two-bedroom apartment in t ...

Issue 159.pdf (726.17 kb)

Heads You Win, Tails I Lose?

Settling in a cozy two-bedroom apartment in the close-knit Anglo-Saxon Jerusalem community in Sanhedria Murchevet, the Werner's signed a three year contract with their landlord Natan Katz for $850 a month. Three months later, the Werner's receive a call from Katz that their rental fee is changing. 

Katz claimed that the agreement was signed when the shekel dollar rate was 4.2 shekels to the dollar.

Now that the dollar dropped drastically to 3.2, he has no choice but demand 3570 NIS a month (850x4.2) ($1115.62) . When he committed for $850, there was no way he could have anticipated such a drastic drop. 

Werner argued that if the dollar had surged to 4.7, Katz would not have called him to give him a discount...   
 

What's the Law?

The Answer

Katz may not raise the rent during the defined term of the contract

 

Detailed Explanation

Heads You Win, Tails I Lose? invokes the following four Halachos. 

Background

The tenant acquires the usage rights under the terms of the contract for the duration of the interval written in the contract.

Rate Increase During the Defined Term Contract

If the rate of local rental prices increased during the duration of the defined-term contract, the landlord may not raise the prices accordingly. Similarly, if the local rental prices fell during the duration of the defined term contract, the tenant may not compel the landlord to readjust the prices, accordingly [Choshen Mishpat 312: 9 Rema, 312: 10].

Rate Increase During the Due Consideration Term [1] 

While the landlord must give the tenant due consideration and warn him/her at least thirty days before wishing to terminate an undefined-term contract, (or thirty days before the season when alternative apartments are difficult to find [see below and Issue 157]); the landlord may raise the rent in accordance with rising rental rates during the “consideration time” [Choshen Mishpat 312: 9]. 

Henceforth: Not Retroactive; While the landlord may raise the rent in accordance with the rising rate during the “consideration time,” he/she may not do so retroactively from the commencement of the compelled “consideration time.” Instead, tenancy is assumed to remain in accordance with the prior terms until specified otherwise [Choshen Mishpat 312: 9].

Application

Katz signed a three-year contract with the Werner’s. Even if the apartment prices increase dramatically during the interim, Katz is bound to uphold the terms of the written agreement. 
                                                          
 [1] Due Consideration for the Tenant
In order to avail the tenant reasonable time to attempt to find alternative housing, when a tenant lives in an apartment without a formal lease, (i.e. there is no defined termination date) the landlord must generally notify the tenant with ample time before wishing to evict him/her from the home.


As such, the Talmud explains that during the summer months when it is customary for people to relocate, whereby creating a market of vacant apartments, the landlord need not inform the tenant more than a month before wishing to terminate the relationship. A month's time during a season where apartments are available is deemed availing sufficient time.


However, the landlord may not evict the tenant in the midst of a season when alternative housing is presumably difficult to find.

As such, the Talmud generally prohibits evicting a tenant in the middle of the rainy season when people do not move, and vacant apartments are difficult to obtain - even if the landlord gives the tenant thirty days warning. By warning the tenant thirty days before wishing to evict him/her during the rainy season, the landlord still failed to provide the tenant with a fair opportunity to seek alternative places to live.


Instead, a landlord who wishes to terminate the undefined lease term during the rainy season must avail the tenant the opportunity to look for new alternatives for one month before the onset of the rainy season [Choshen Mishpat 312: 5].

 

Foreclosure and Expulsion     Issue #: 157

Issue 157.pdf (1.23 mb) Foreclosure and Expulsion On a serene and stunning tree-lined Jerusalem bloc ...

Issue 157.pdf (1.23 mb)

Foreclosure and Expulsion

On a serene and stunning tree-lined Jerusalem block; a cohesive cross-sectional community began to blossom.

Two immigrant cousins; Aviva Goldstein from Forest Hills and Meira Steinberg from Los Angeles, enjoyed raising their young budding families alongside one another in Ramat HaGolan 16. Their husbands studied together in a vibrant Yeshiva in the Old-City.

After three-and-a-half wholesome years of comradery and caring, new emerging circumstances threatened their continued neighborly co-existence.

Both Goldstein’s and Steinberg’s respective landlords were experiencing financial upheavals and on December 23rd conveyed their mutual interests in terminating both rental agreements abruptly, come January 15th 2006.

  1. Goldstein initially signed a one-year contract and upon completing the initial signed agreement, continued paying rent every three months for two-and-a-half years and counting.

All of that seemed to be coming to an unfortunate end as Goldstein’s landlord Gadi Kahn; an expatriate from a cherry-tomato farm in Gush Katif slowly came to grips with the fact that his family was left tragically homeless itself.   

Though Jerusalem city-life was far different than growing up amidst the Rafiach-Yam vines; living quarters were still a place to call home …

  1. The Steinberg’s signed a new contract year after year on August 15th.

Strapped for cash due to a series of business failures, Steinberg’s landlord was compelled to put his Jerusalem rental apartment up for an immediate sale to prevent the bank from foreclosing on his Kiryat Ono villa.

Notwithstanding  Steinberg’s lease; their landlord could only find a buyer who agreed to purchase the apartment on condition that the Steinberg’s vacate it immediately.

 

 

Ø  May the Goldstein’s landlord kick them out on January 15th?

Ø  Pressed for cash, may Steinberg’s landlord sell the apartment to a buyer who refuses to respect the standing rental agreement?

 

What’s the Law?

 

The Answer:

Barring local custom, according to Torah Law, Goldstein’s landlord may not evict them on January 15th. Steinberg’s landlord may not sell his rental apartment under such terms. If he did do so, we could not force him to annul the sale.

 

Detailed Explanation

 

 

Foreclosure and Expulsion invokes the following laws.

Background:

  1. A landlord may generally not breach a lease contract and evict the tenant during the defined duration of the lease [Choshen Mishpat 312:1]. (See below for possible exception.)

 

  1. Once the defined-time lease terminates, the landlord can legally expect the tenant to vacate the premises, {regardless of whether the tenant can find alternative housing, as the tenant had ample time to prepare for the eventual need to find alternative living quarters} [Choshen Mishpat 312: 8].

 

  1. If the landlord sells the rental apartment during the interim of the lease, the buyer must respect the terms of the contract originally signed between the seller and the present tenant [Choshen Mishpat 312: 12].

 

  1. If the landlord destroys or sells the rental apartment to a scofflaw who will not respect the terms of the seller’s contract with the present tenant, the seller must provide the tenant with an alternative similar living quarters [Choshen Mishpat 312: 17].

Due Consideration for the Tenant

In order to avail the tenant reasonable time to attempt to find alternative housing, when a tenant lives in an apartment without a formal lease, (i.e. there is no defined termination date) the landlord must generally notify the tenant with ample time before wishing to evict him/her from the home.

As such, the Talmud explains that during the summer months when it is customary for people to relocate, whereby creating a market of vacant apartments, the landlord need not inform the tenant more than a month before wishing to terminate the relationship.  A month’s time during a season where apartments are available is deemed availing sufficient time.

However, the landlord may not evict the tenant in the midst of a season when alternative housing is presumably difficult to find. As such, the Talmud generally prohibits evicting a tenant in the middle of the rainy season when people do not move, and vacant apartments are difficult to obtain - even if the landlord gives the tenant thirty days warning. By warning the tenant thirty days before wishing to evict him/her during the rainy season, the landlord still failed to provide the tenant with a fair opportunity to seek alternative places to live.

Instead, a  landlord who wishes to terminate the undefined lease term during the rainy season  must avail the tenant the opportunity to look for new alternatives for one month before the onset of the rainy season [Choshen Mishpat 312: 5]. 

Due Consideration for the Landlord

Undefined Contract: Consideration 1

Just as the landlord must display due consideration to a tenant dwelling with an undefined contract term; the tenant is expected to display due consideration to the landlord when appropriate.

Thus, the tenant must give the landlord thirty days notice before wishing to leave in a season when new tenants are easy to find.  If the tenant wishes to terminate the stay in the middle of a season when alternative tenants are difficult to find, the tenant must notify the landlord of his/her intentions thirty days before the onset of the difficult season [Choshen Mishpat 312: 7].

 

Undefined Contract: Consideration 2

If the landlord’s own home collapses, whereby leaving the landlord homeless; were he/she not to use the rental apartment for his/her personal use; while the landlord may not evict a tenant who holds a time-defined lease in the middle of the rental term – he/she may evict a tenant who holds an undefined lease without forewarning in order to prevent him/herself from becoming homeless [Choshen Mishpat 312: 11].     

 

Does a situation exist which could conceivably permit a landlord to terminate a time-defined contract mid-term?

 

Rema maintains that while it is true that once a landlord loses his/her home, he/she may not evict a tenant who is protected by a time-defined lease; there is one example of a situation where the landlord can evict the tenant even in the midst of a time-defined contract.

If the landlord is about to lose his own residence i.e. due to a pending foreclosure, and could prevent such a devastating phenomenon from occurring through one option i.e. selling the rental apartment to a buyer who will not respect the rental agreement, he/she may do so to prevent himself/herself from losing his/her home [Rema 312: 1, see Aruch Hashulchan 312: 3 for rationalization and qualification of Rema’s ruling].

Nesivos disagrees and maintains that the landlord must uphold the contract even at the expense of foreclosing on his/her own home [Nesivos 312: 1].

Practically, in light of the two aforementioned views, we would prohibit the landlord from evicting the tenant to protect him/herself from suffering a foreclosure on his/her own residence; but if the landlord did do so, we would not be able to compel him/her to bring the evicted tenant back in.

A tenant continues living and paying the original rental fee after the written time-defined lease terminates without having signed a new lease.

Do we view the subsequent months henceforth, as though the tenant is living without a time-defined lease or do the terms of the original lease automatically renew themselves?

 

Aruch Hashulchan generally views such a phenomenon as though there is no time-defined lease. As such, the landlord may evict the tenant in the middle of the subsequent term provided that he/she gives the tenant thirty days warning during a season when vacant apartments are available and thirty days prior to the season when vacancies are difficult to find [Aruch Hashulchan 312: 24, see ibid 23 for situations when Aruch Hashulchan views the subsequent undefined term as though there was an automatic renewal of the contract and as such would prohibit the landlord from evicting the tenant during the second interim.]

Chochmas Shlomo however maintains that if the landlord permitted the tenant to remain in the apartment after the termination of the time-defined lease without conferring with him/her, the contract automatically renews itself in accordance for the same duration of time. As such, if the initial contract was for a year; by allowing the tenant to remain after the culmination of the first year without conferring with him/her; the landlord forfeits his/her right to evict the tenant until the culmination of the second year.

Application:

Goldstein: While Goldstein’s landlord was left homeless, evicting the Goldstein’s would not have prevented the colossal loss of their home in Rafiach-Yam. Goldstein’s landlord’s home already fell. Thus, Goldstein’s landlord cannot use the “ tragedy card” to evict the Goldstein’s before their time was up.

The question is simply when was their time up? Chochmas Shlomo views them as though they were locked in until the end of the third subsequent year, while Aruch Hashulchan views them as though they were under an undefined-time contract. Though they could be evicted before the end of the year, the landlord must give them ample warning time i.e. a month during a season where apartments are readily available or a month before the commencement of a season when apartments are difficult to find.

Goldstein was warned three weeks before the eviction date that he had to vacate the apartment; an insufficient amount of time on all accounts. Unless local custom permits a shorter warning time, Goldstein’s landlord may not evict them on January 15th.

Steinberg: Steinberg maintained a time-defined lease. Steinberg’s landlord was faced with a pending foreclosure and only preventative recourse was to sell his Jerusalem rental apartment to the first buyer whether or not the buyer would respect the standing rental contract with Steinberg. Rema would permit Steinberg’s landlord to go through with the deal and leave Steinberg homeless suddenly, while Nesivos would prohibit him from doing so.

As such we would not allow Steinberg’s landlord to abrogate their rental agreement with Steinberg in order to protect his own foreclosure. However, if he carried through with the deal Steinberg would not be able to force himself back into the apartment.

Rental Return?     Issue #: 154

Issue 154.pdf (645.26 kb) Rental Return?  The Friedman's two week vacation in the Golan Heights ...

Issue 154.pdf (645.26 kb)

Rental Return?
 

The Friedman's two week vacation in the Golan Heights  came to an abrupt end, one week in - after the IDF insisted that they vacate their rental cottage. Security conditions warranted a military outpost on its roof.
 
The Friedman's refused to pay the landlord for the week that they were unable to live inside.
 

What's the Law?
 

The Answer:
If the army took over numerous homes in the area in a manner which made it uninhabitable, the Friedman’s need not pay for the second week. 

If this was the only home in the area which the army took over, if the Friedman’s already paid for the second week, Beit Din could not require the lessor to return the money.

 

Detailed Explanation:

Rental Return invokes the following laws. 

A (leasee, שוכר) rented an animal from B (lessor, משכיר) to perform a specified task. Due to an unforeseen occurrence, the animal's functionality, became temporarily severely compromised. 

B ( lessor, משכיר) can require A (leasee, שוכר ) to wait until the animal regains its full functionality, allow the service to be rendered, and then bill A (leasee, שוכר) accordingly, for the postponed service [Choshen Mishpat 310:1, Sm"a 2].

*

A (leasee, שוכר) rented an animal from B (lessor, משכיר) to perform a specified task. Due to no irresponsibility on A or B's part, the animal died while performing the task. 

If the first part of the job is financially beneficial to A, A pays for the first part of the job. 

With regards to the half of the intended service never rendered, no one was at fault. It was rather a result of a fateful mishap.

But to who’s “fate, or mazal” do we attribute this mishap?

As the animal’s death will affect B, the lessor beyond the termination of the rental interval, we attribute the mishap to B’s “fate”. 

As such, A is absolved from paying for the non rendered service.

[Note 1: Under certain conditions, (see subsequent issues,) A (leasee, שוכר) can require B (lessor, משכיר) to provide him/her with a fair replacement.] 

*

A (leasee, שוכר) rented an animal from B (lessor, משכיר) for a specified interval. The animal did not die, but its functionality became temporarily severely compromised and would recover only after the prescribed time. 

B will be able to benefit from the animal after the termination of the rental. However, for A's purposes, the animal “figuratively died".

No one was at fault. It was rather a fateful mishap.

But to who’s “fate, or mazal” do we attribute the mishap?

If the nature of the unforeseen “death-like mishap” was such, that it would have occurred equally under B’s (lessor, משכיר) watch, we attribute the mishap to B’s fate.

As such, B must absorb the loss (i.e. the regime searched the homes to impound the animals temporarily and would have found the animal in B’s home as well).

*

If the nature of the unforeseen “death-like mishap” was such, that A (leasee, שוכר) indirectly facilitated the phenomenon (i.e. the regime searched the roadways on which A traveled to impound the animals), we attribute the mishap to A’s (leasee, שוכר) fate.

Hence, A (leasee, שוכר) must pay for the agreed rental price irrespective of whether he/she benefitted from the animal or not [Nesivos Choshen Mishpat 310: 2, 3].

*

Q. Should an army temporarily and unforeseeably take over the rented home for the duration of the rental period, in a manner which makes the home unlivable; to whose fate do we attribute the phenomenon?

Nesivos [ibid.] understands this phenomenon as such, that it would have occurred irrespective of whether A was renting the home; very similar to a situation where the regime was searching through the homes to impound animals. Accordingly, Nesivos attributes this phenomenon to the B (lessor, משכיר)’s fate, and thus absolves A (leasee, שוכר) from paying for the time he/she was unable to live in the home. 

Machane Efraim [Hilchos Sechirus 6] agrees with Nesivos, if the army were to overtake numerous homes. However, if the army only took over the rental home, and no other home in the area; Machane Efraim attributes the phenomenon to both A’s and B’s fate.

As such, Machane Efraim compromises and rules that while A need not pay for the time he/she was unable to live in the home; if A already paid for the time he/she was unable to live in the home, we would not compel B to return the money.

Conclusion:

When two valid conflicting Halachic views exist, the Lower Court employs the formula of hamotzi mechaveiro alav harayah המוציא מחבירו עליו הראיה (leaving the Heavenly Court to set the record straight) and permits the status quo to continue.

As such, practically, though we would not compel A to pay for the time he/she was unable to live in the home; if A already paid for the time he/she was unable to live in the home, we would not compel B to return the money. 

If however, the army took over numerous homes in the area in a manner which made it uninhabitable, the Friedman’s may even demand a refund for the second week, as all authorities attribute this phenomenon to the fate of the lessor. 

The Schnitzel Sham     Issue #: 146

THE SCHNITZEL SHAM   "Celebrate with The Schnitzel Place: Homemade Gourmet Meals for Less. $30 ...

THE SCHNITZEL SHAM

 

"Celebrate with The Schnitzel Place: Homemade Gourmet Meals for Less. $30 a plate. Delivery to hall and setup for an additional $2 a plate."

As the out of town guests eagerly arrived, Hyman and the bar mitzvah boy Josh's palpable excitement turned sour when they discovered a bare hall devoid of schnitzels.

The Schnitzel Place delivered the meals to the wrong hall.

 

 

Ø  The Schnitzel Place failed to deliver the meals to the appropriate location. Must Hyman pay for the meals?

 

The Answer:

Whether The Schnitzel Place provided the delivery service themselves or else they hired a third party to do so, Hyman is absolved from paying for the meals. If the third party delivery service was commissioned by Hyman, Hyman remains liable towards The Schnitzel Place.

Detailed Explanation:


The Schnitzel Sham invokes the following Halachos

  1. When a defect in a sale is easily rectifiable (i.e. adding/subtracting an additional unit) the transaction is valid but the buyer may demand reimbursement for the difference [Choshen Mishpat 232:1].
  2. A consumer whose defective merchandise is of such that when the defect is rectified it would not change or adversely affect the quality of the merchandise, may not annul the sale. Instead, he/she may require the seller to rectify the issue (and when appropriate duly deduct from the original sale price) [Choshen Mishpat 232:5, Nesivos 7].
  3. Repairing the defect is the seller’s responsibility. The consumer may annul the sale if the merchant does not fulfill his/her duty to repair the merchandise [Ulam Hamishpat Choshen Mishpat. 232].
  4. Time-sensitive defects are not considered rectifiable after the time expires [Choshen Mishpat 232: Bach 4].
  5. A merchant remains liable for merchandise en route to the consumer via the merchant’s employee or courier [Choshen Mishpat 340:6].

 

 

Application:                                                                                   

Hyman ordered schnitzels to be delivered to his bar mitzvah hall. The sale included the production of the food and the delivery. While The Schnitzel Place prepared the food, they delivered it to the wrong destination. Hyman encountered a time sensitive defect in the sale. The Schnitzel Place has a small window of opportunity to re-deliver it to the correct destination. Otherwise, Hyman may demand a full refund for the food.

This applies even if The Schnitzel Place outsourced their deliver service to a third party. If however, the delivery service were to be employed by Hyman, Hyman is not absolved from paying The Schnitzel Place for the food.

Stranded Passenger     Issue #: 151

Stranded Passenger Hungarian national airline Malev has folded after its financial situation became ...

Stranded Passenger

Hungarian national airline Malev has folded after its financial situation became unsustainable.

"After 66 years of almost continuous operation Malev will no longer take off," the report said.

Chief executive Lorant Limburger said the immediate reason for the collapse was the demand for upfront payments by its suppliers.

Prime Minister Viktor Orban said on state radio that two Malev planes were still overseas, one in Tel Aviv, the other in the Irish Republic.

The premier said those planes were not allowed to take off because of Malev's debts.

Having stopped over in Ireland, Irving was stranded (BBC).

  • According to Torah Law, what are Malev's responsibilities towards Irving.
  • May Irving demand a refund for the first leg of the trip?

 

What's the Law?
The Answer

Malev pays the expenses to get to Tel Aviv. If they do not pay, Irving may demand a refund but must pay for any benefit received by getting half-way.

 

Detailed Explanation

 

Stranded Passenger invokes the following three laws. 

 

1. A rented an animal from B to take him from point 1 to point 2. The animal died unexpectedly. Is the rented animal provided to get A to point 2 or is B required to get A to point 2?

 

It depends on the nature of the contract.

If A specifically rented a certain defined animal, the defined animal is indentured toward providing A the means to get to point 2.

Hence, B's liability towards A does not exceed the value of the animal rented. Costs incurred to A beyond the value of the defined animal need not be covered by B. As the animal died unexpectedly, B can claim that it was A's bad luck.

 

However, if the nature of the rental terms were such that B was to provide A with a medium to travel to point 2, then B obligates himself/the company/his assets to provide A with the means of to reach point 2 even beyond the value of the animal that they happened to choose [Choshen Mishpat 310:2].

2. Irrespective of the aforementioned natures of the contract terms, B may not give A an animal which he knows to be ill and at risk of dying en route. If he does so, his liability will exceed the value of the animal [Nesivos 310:1].

3. If B does not provide A the means to reach point 2 when required, B must return the rental fee. A must pay for any benefit he/she may have received from reaching the "half-way point."[Choshen Mishpat 310:1].

 

Application

 

Irving purchased a ticket from Malev from NY - Ireland - Tel Aviv. If Malev had reason to suspect that they may suddenly fold, they should not have put Irving in the situation. They would be required to get him to Israel at all costs.

Irving purchased a "way to get to Tel Aviv". He did not rent a "certain defined aircraft." As such, even if they folded unexpectedly, they are required to get him there at all costs.

If Malev would leave Irving to find his own way, Irving can demand a refund for the ticket. However, if he benefited by getting half-way, he would have to pay Malev that amount.