(based on Shoel U’meishiv II:IV:114)
Case: Reuven gave money to Shimon to use for business, with the plan to share profits according to the terms of a normal heter iska. Based on the heter iska, some of the money was given as an interest-free loan and some was given for Shimon to deal with on behalf of Reuven, so that Shimon would give set envisioned profits to Reuven unless he could demonstrate that there were less profits than expected. Levi signed as an arev (guarantor), so that if Shimon did not pay according to the agreement, Levi would pay Reuven in Shimon’s place. The question arose whether Levi was responsible only for the principal of the loan/investment, or for the profits as well.
Ruling: The Shach (Choshen Mishpat 129:12) rules that the arvut in relation to the obligation from profits is like one who becomes an arev at a time other than the time the money is lent, which is binding only if a special kinyan is made. The K’tzot Hachoshen (129:2) argues, saying that since the money of the profits was accrued on behalf of the investor, it is considered his money, so that the arev is like one who becomes an arev at the time it is considered principal.
The sharp-thinking dayan, R. Chayim Yosef Ellinberg, raised the following issue. Since it is unknown whether Shimon will earn money from the investment, how can Levi obligate himself to something unknown, as such a commitment is equivalent to accepting arev status not at the time of the loan? However, this idea is incorrect because, if and when there is profit, at the time that the profit enters Shimon’s possession and Levi has not rescinded his willingness to be an arev, it is considered becoming an arev at the time of loan.
I have discussed in my sefer Yad Shaul the statement of the Rashba, which can be understood as referring to the arev obligating himself on future profits. I wrote that the Rashba should be understood regarding past profits, whereas once the profits are realized, it is considered binding. It is surprising that the Shach did not cite this opinion of the Rashba.
The aforementioned K’tzot Hachoshen says that the arev becomes obligated when the profit is known. Rav Ellinberg deduced from this that in a case where the arev does not know if there was profit, he should be like a potentially obligated person who claims that he does not know if he ever became obligated. Such a person is indeed exempt even if the plaintiff presents a definite claim. However, it is a mistake to view the claims from the perspective of the arev (Levi) but from the perspective of the recipient (Shimon), as Levi is obligated to pay whenever it is that Shimon is deemed obligated to pay. We cannot say that Shimon himself is able to say that he is unsure whether there was gain because according to the terms of the heter iska, he has to swear that indeed there was no profit.
P'ninat Mishpat (576)
Various Rabbis
309 - Sanctions Against Overchargers Against the Rabbi’s Will
310 - A Guarantor on a Loan/Investment
311 - Putting Pressure on Male Inheritors
Load More
Case: Reuven gave money to Shimon to use for business, with the plan to share profits according to the terms of a normal heter iska. Based on the heter iska, some of the money was given as an interest-free loan and some was given for Shimon to deal with on behalf of Reuven, so that Shimon would give set envisioned profits to Reuven unless he could demonstrate that there were less profits than expected. Levi signed as an arev (guarantor), so that if Shimon did not pay according to the agreement, Levi would pay Reuven in Shimon’s place. The question arose whether Levi was responsible only for the principal of the loan/investment, or for the profits as well.
Ruling: The Shach (Choshen Mishpat 129:12) rules that the arvut in relation to the obligation from profits is like one who becomes an arev at a time other than the time the money is lent, which is binding only if a special kinyan is made. The K’tzot Hachoshen (129:2) argues, saying that since the money of the profits was accrued on behalf of the investor, it is considered his money, so that the arev is like one who becomes an arev at the time it is considered principal.
The sharp-thinking dayan, R. Chayim Yosef Ellinberg, raised the following issue. Since it is unknown whether Shimon will earn money from the investment, how can Levi obligate himself to something unknown, as such a commitment is equivalent to accepting arev status not at the time of the loan? However, this idea is incorrect because, if and when there is profit, at the time that the profit enters Shimon’s possession and Levi has not rescinded his willingness to be an arev, it is considered becoming an arev at the time of loan.
I have discussed in my sefer Yad Shaul the statement of the Rashba, which can be understood as referring to the arev obligating himself on future profits. I wrote that the Rashba should be understood regarding past profits, whereas once the profits are realized, it is considered binding. It is surprising that the Shach did not cite this opinion of the Rashba.
The aforementioned K’tzot Hachoshen says that the arev becomes obligated when the profit is known. Rav Ellinberg deduced from this that in a case where the arev does not know if there was profit, he should be like a potentially obligated person who claims that he does not know if he ever became obligated. Such a person is indeed exempt even if the plaintiff presents a definite claim. However, it is a mistake to view the claims from the perspective of the arev (Levi) but from the perspective of the recipient (Shimon), as Levi is obligated to pay whenever it is that Shimon is deemed obligated to pay. We cannot say that Shimon himself is able to say that he is unsure whether there was gain because according to the terms of the heter iska, he has to swear that indeed there was no profit.
