Money Given for Shemitta Observant Farms – Part II

Case: The plaintiff (=pl) gave 480,000 NIS, for which he needed to take a mortgage, to the defendant (=def), an unregistered partnership of neighboring farms, to enable them to work their fields during Shemitta according to the otzar beit din system (without a heter mechira). Def was supposed to return the money plus 40% of net profits, which were expected due to an agreement to supply pepper to an otzar beit din (=obd) at 5 NIS per kilo. The obd did not keep their deal, causing def to do a late harvest and produce less than expected. Def ended up losing for the season, despite receiving some compensation from their insurance. Def returned a small amount to pl and admitted to owing another 307,000 NIS; their representative had stated in a text message that they owe 338,600 NIS. Pl demands a return of all of the loan plus compensation for pl’s mortgage payment and what he could have earned elsewhere with the money. Pl claims that since def acted negligently, pl and def’s contract, which required def to act financially wisely, is null. Specifically, they should not have allowed obd to lower the price, but should have harvested on time, forced the produce onto obd, cashed obd’s guarantee check, and started working according to a heter mechira. Instead, def signed a compromise agreement with obd. Def also paid too much money to a marketing agent. The contract’s provisions for a breached contract award pl significant compensation (we will omit details). Also, def used some of the funds for other purposes. Def claims to have done the best possible under the circumstances, which include the actions of obd (which was not directly obligated to def but to their yishuv) and the impact of following the halacha on the growing process. The sides also differ if their agreement was of a loan or an investment.

Ruling: [Last time we saw that the money pl gave was an investment, which leaves him open to losing profits and even principal, and that def’s agreement to compromise with obd was not necessarily negligence.]

In general, the claim of negligence needs to be proven in order to extract money. None of the area’s farmers had an individual contract with obd, and there were advantages to going as a group, and therefore one cannot prove negligence there. The idea of harvesting on time and forcing obd to receive the produce is hard to demonstrate to be an advantage. First, greater harvest would have come with a labor cost and there would not have been a payment by insurance, so that most of the ostensible advantage is not true. Second, if obm did not sign on receipt of the produce, it is unlikely that def could have forced obm to pay for it.

On the other hand, one can question the wisdom of not switching to the heter mechira system earlier, as all the other area’s farmers did. While the agreement with pl does state pl’s desire to take part in keeping Shemitta properly, which def shared, since the switch after obd breached the contract was a natural step, def should have at least discussed the matter with pl. Therefore, out of compromise that is close to din, beit din awards pl 15,000 NIS in damages for the likely negligence of not switching earlier.

We will finish up with other elements next week.