Beit Midrash

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Is a Downpayment Given to a Lawyer Binding?


Various Rabbis

Case: The defendant (=def) is the representative of a group of inheritors who, through a lawyer, entered negotiations to sell a property to the plaintiff (=pl). They agreed on a price, and pl paid app. 12% as a down payment. A contract was drafted, and requested emendations by def caused a delay in the signing of the contract. Eventually, def decided to return the down payment and not go through with the sale, which caused a loss to pl, who had already hired an architect to make building plans. Therefore, pl demands that the sale be upheld. Def says that the lawyer was instructed not to finalize a sale without def’s final agreement, which in turn required agreement from all the joint inheritors. (One of the inheritors decided to buy out the others and keep the property.) Def points out that the contract was never signed, and the property was not transferred in the Tabu (Land Registry).

Ruling: Although even partial payment is a kinyan (act of finalization) for the sale of land (Shulchan Aruch, Choshen Mishpat 190:1), in a place where it is standard to also have a contract, money alone is not a kinyan (ibid. 7). In our times, there are two documents that are needed: the sales contract and the transfer in the Tabu. In fact, sales contracts are written not as a document that effects a kinyan of the object, but as a promise to complete a sale. This explains why monetary penalties are written as the consequence of breach of contract. The law of the land that requires a change in the Tabu is also valid (Divrei Emet 12; see Chatam Sofer, CM 142).
On the other hand, when someone pays for an object and the kinyan is not binding, one who backs out has to undergo a mi shepara (a curse of sorts for he who does not keep his word). The Ramban says that mi shepara does not apply to land, since it was instituted for cases where money is not a kinyan, whereas for land, money is a kinyan, even if at times other kinyanim are needed to supplement it. The Talmidei HaRashba and others say that whenever money was given but the kinyan was still not binding, mi shepara applies, and the latter is the more accepted position among the Acharonim.
Still, there are not grounds for mi shepara for the following reasons. First, it can be demonstrated that in this case, the agreement was made conditional on def’s final approval, which never materialized. In contrast, mi shepara is called for only when there is final oral agreement, money was given, and only a formal action was missing (see Shoel U’meishiv II:IV:110). Secondly, it has not been proven that def had authorized the lawyer to receive payment at that time. Also, since def had to confirm the agreement with the other partners, the lawyer’s actions are deemed representing others in an undesired manner, in which case the agency is not valid (see Shulchan Aruch, CM 182:7).
While it is regrettable that pl wasted money based on his understanding, there are not grounds to force def to complete the desired transaction.
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