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Beit Midrash
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- Chemdat Yamim
- P'ninat Mishpat
Case: The plaintiff (=pl) lent $200,000 to the defendants (=def) at 12% interest annually so that they could invest it in a commercial project in the US, as spelled out in a loan agreement. For two years, def made interest payments. The project is stalled, and def have financial difficulties. Pl wants to receive the remaining interest and cancel the loan and receive the principal. Def #1 claims that the loan is payable only when they sell the business they invested in but admits that they will then have to pay in full. Def #2 argues that no heter iska was signed (although it had been planned), and it is therefore forbidden to pay interest. He is also willing to swear that the investment produced losses, in which case, the laws of iska dictate that they do not have to pay in full. That which was already paid should count as principal and subtracted from the $200,000. Pl says that there was a heter iska, even though he does not find it, and that this loan was to be paid even if the main enterprise sustained losses.
Ruling: [Last time we saw that the monthly payment was for profits and was not payment of principal and that even without producing a heter iska, we can assume one existed].
P'ninat Mishpat (832)
Various Rabbis
399 - Returning a Loan That Might Have Had Heter Iska – Part I
400 - Returning a Loan That Might Have Had Heter Iska – Part II
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In this case, we assumed there was a heter iska document even though it was not presented. However, we have no reason to assume that the heter iska was done in a manner that strengthens pl’s rights. Even if we assume (see Maharsham II:216) that a heter iska creates a lien on all of the recipients’ property, that does not mean that the profits are linked to them all. This is especially true in a case like this, where the loan agreement links the investment to a specific property.
Many contemporary heterei iska are based on the Chochmat Adam’s model, by whose terms the investment is renewed on a monthly basis, and silence is considered admission of profits. In a case like ours, where there were monthly installment payments of profits, it is more likely to view them as an admission of profit. (Admittedly, it is possible that he paid them as only down payments on the assumption of a future determination of profit).
Based on the uncertainty as to the arrangement between the sides, beit din rules that def should return all of the principal. Regarding interest, def should not pay any more but may not subtract that which was already paid from the full principal due.
P'ninat Mishpat P'ninat Mishpat: Realtor’s Fee on Large Commercial Building – part I
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P'ninat Mishpat P'ninat Mishpat: Late and Flawed Apartment
based on ruling 82174 of the Eretz Hemdah-Gazit Rabbinical Courts
Rabbis in Midrash
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