Sections
P'ninat Mishpat

A Sale with out a Signed Agreement

The plaintiff (=pl) rented a house from the defendant (=def). Later the two negotiated pl’s purchase of the house. Pl claims that they agreed on terms; he admits that no contract or letter of intent was signed. Subsequently, def decided not to sell the house and raised the rent after the rental period ended. Pl wants the sale upheld and, if not, that def pay for damages, as he lost the chance to buy other homes that have since gone up in price. Def denies there was ever a firm agreement on such a sale. Also, pl was supposed to have vacated the premises at the end of the rental period, and thus, based on a clause in the rental agreement, pl is to pay $50 a day for not vacating the house.

751

Various Rabbis

5769

Case:

The plaintiff (=pl) rented a house from the defendant (=def). Later the two negotiated pl’s purchase of the house. Pl claims that they agreed on terms; he admits that no contract or letter of intent was signed. Subsequently, def decided not to sell the house and raised the rent after the rental period ended. Pl wants the sale upheld and, if not, that def pay for damages, as he lost the chance to buy other homes that have since gone up in price. Def denies there was ever a firm agreement on such a sale. Also, pl was supposed to have vacated the premises at the end of the rental period, and thus, based on a clause in the rental agreement, pl is to pay $50 a day for not vacating the house.

Ruling: Pl did not prove that def firmly agreed to sell the house to him. Indications are that they never got out of the negotiations phase. Even if pl would prove his claim, it would not bind def. The Shulchan Aruch (Choshen Mishpat 189:1) rules that a sale is not finalized by oral agreement even if a firm price is set. However, we must consider if an oral agreement has any force. The Rashba implies that one can obligate himself to perform a sale at a future point. However, the Shulchan Aruch (CM 60:6) says that this requires some act of kinyan. A kinyan is not needed if there were witnesses to the obligation (ibid., CM 40:1). In our case, there were no witnesses.
There is a concept that one who agrees to a sale but makes no kinyan still has a moral obligation to go through with the deal. As the Shulchan Aruch (CM 204:7) rules, the Rabbis are not pleased with such a person. The Raanach (I, 118) says that beit din may pronounce such a person as a sinner. There is a machloket Rishonim regarding one who backs out of a non-binding agreement due to a rise in prices, and the Rama (ibid.:11) cites both opinions. Although he leans toward the strict ruling, the Shach, Gra (ad loc.), Chatam Sofer, and Shevet Halevi allow him to change his mind.
Damages to pl due to his reliance on the proposed sale are not subject to compensation (Netivot Hamishpat 333:3). The Divrei Malkiel (V, 128) says that he would have to pay only for actual losses, not lost opportunities.
The penalty clause for not vacating the house is an asmachta (an obligation one never expected to have to pay). Although there are systems to make one pay even for an asmachta, those techniques were not employed. Although our policy is to usually recognize obligations that are accepted by society due to the law of the land. However, even if this clause is binding in secular court, in a case like this where the property was not vacated because the matter was being adjudicated in beit din, payment is inappropriate. Pl did not agree to pay under such circumstances.