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Iska Obligation With the Claim There Weren’t Profits


Various Rabbis

(based on Shoel U’meishiv, II:II:18 – part II)

[Sarah, whose husband was away for an extended period of time, borrowed money from Reuven, which included payments of expected profits based on a heter iska, which stated that she invested the money she received. Now Sarah claims that she gave the money to one specific person and did not see profits, and so she is not willing to pay the promised profits. Upon the husband’s return, he claimed that he was not obligated to return even the principal, because his wife took the loan without his authorization.]

(Last week we dealt with the husband’s responsibility.)

Regarding the claim that the iska (investment) money Sarah was given did not produce profits, the matter may be affected by the fact that she already made payments. There are two opinions in the Shulchan Aruch (Choshen Mishpat 81:30) concerning a case where one made interim payments on iska money under the assumption that they were for profits and now he claims that there were no profits and the payments should count to reduce the principal. According to the first opinion, he cannot change the purpose of those payments to count toward principal and exempt himself from profit payment by swearing that there were not profits. According to the second opinion, he can now swear that there were no profits and change the nature of the past payments. The Shach (ad loc.) rules like the first opinion that that which was paid as profit is irretrievable.
Here matters are even clearer, as the money was given with a shtar (document). Since the shtar spells out the payment of set assumed profit as a given, one who claims that there was no profit is like one who claims that he has paid and thereby relieved his obligation. As such, the burden of proof is on Sarah. Since the profit was paid and the principal remains and the shtar makes it considered as if the payment has already been made, it is Sarah who is trying to "extract money."
Even as far as future profit is concerned, Sarah’s claim, that she transferred the funds to someone else and that person says there are no profits, is not a good claim. She was given the money to invest and is ultimately responsible for the profit that she pledged to make. Even if we believe her that she gave money to someone else, who is to say that it was the iska funds that she gave to him? Furthermore, Reuven and Sarah are like partners in the iska money in such a way that if the moves that Sarah took caused losses, she is responsible, whereas the profit will be split evenly. If Sarah swears that she did not earn money in any of her investments, then she is believed about future profit but not about that which she already gave.
In this case, Reuven wrote a waiver of his rights to profits payment. However, the waiver is not valid because he told witnesses that he wrote it only so Sarah would agree to make her principal payments. When we know that she indeed made such threats, his apparent concessions are considered coerced and ineffective. Therefore, Sarah should pay all the money that was set forth in the iska contract.
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