June 22, 2024
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June 22, 2024
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Laws Prohibiting the Charging of Interest: The Snakebite רבית

Bava Metzia 63b

“If I make the slightest mistake, imagine how many people will be eating non-kosher meat because of me,” said the town shochet, the ritual slaughterer to Rabbi Yisrael Salanter. “I cannot have this on my conscience any longer. I shall go into business instead.”

“Business?” wondered Rabbi Yisrael. “Do you know how many positive and negative commandments you have to worry about in business and how careful you have to be not to violate them? Stick with shechita. You only have to worry about one.”

“You shall not rob.” “You shall not steal.” “You shall not defraud one another.” “You shall not oppress an employee who is poor or desolate.” “You shall not cheat in measures and weights.” “You shall not take interest.”

It would be wonderful, writes Rabbi Avrohom Pam, if people would be required to take semichah in the laws of Choshen Mishpat, the laws of business integrity, before going into business.

This article and the next one will focus on the Torah prohibition against charging interest. First, we shall define the various categories of interest and the activities that involve the payment and receiving of interest. Then we shall explain the various ways and situations in which interest may be paid and received without violating the Halacha.

Interest is referred to in the Torah as נשך, neshech, from the word לנשוך, linshoch, which means to bite. Interest bites you like a snake and slowly devours you, explains Rashi. Interest is also referred to in halacha as רבית, ribbit, from the word מרבית, marbit, to increase, because it increases the debt.

Ribbit is defined in the Talmud as אגר נטר, agar natar, which means any compensation, whether in money or in kind, that a Jew receives from a fellow Jew for having to wait for payment.

If a transaction included ribbit, then according to the Rambam, the lender would be in violation of six different Torah prohibitions, equivalent to the six times the Torah forbids the lender from receiving ribbit. The borrower would be in violation of three different Torah prohibitions equivalent to the three times the Torah forbids the borrower to pay ribbit.

Unlike other monetary prohibitions, including the prohibition against ona’ah, the parties to a transaction cannot contract out of the ribbit prohibition. Even if the debtor agrees to pay ribbit, the transaction remains prohibited. The prohibition against ribbit applies equally to money, commodities and services. Accordingly, if one borrowed six eggs from one’s neighbor, one may not return seven. If one’s neighbor painted his house free of charge, one may not paint his neighbor’s house in return if it is larger than his own house.

The prohibitions against ribbit falls into two major categories. The Torah prohibition, known as רבית קצוצה, ribbit ketzutza, and the Rabbinic prohibition, known as אבק רבית, avak ribbit.

Categorizing ribbit as ribbit ketzuza or avak ribbit is of major importance. For one, ribbit ketzuza is recoverable by the borrower in court whereas avak ribbit is not. Also, as in other areas of halacha, there is more room for leniency and flexibility when dealing with Rabbinic prohibitions than there is when dealing with Torah prohibitions.

Ribbit ketzutza, or Torah ribbit occurs only in the context of a loan transaction (as opposed to a sale transaction) and only when the agreement to pay interest was entered into at the same time as the money or other item was loaned. If the maturity date of the loan arrives and the lender agrees to extend the term of the loan for an additional compensation, this too, according to some Halachic authorities, constitutes ribbit ketzuza. If the payment of ribbit was agreed to only after the money or other item was loaned, then there is no violation of ribbit ketzuza, but there is a violation of avak ribbit.

A person who sends another a gift specifying that it is to encourage the recipient to lend him money or a substantial gift even without such specification, violates the prohibition of avak ribbit. So too, a borrower who sends the lender a gift in articulated appreciation of a past loan, which has already been repaid, violates the prohibition of avak ribbit.

An amount of money added to the price of goods to compensate the seller for deferred payment violates the prohibition of avak ribbit. This, however, is only the case if the seller explicitly informs the buyer that the extra charge is because of the deferred payment. There would, however, be no violation of avak ribbit if the seller simply charged an increased amount without specifying that it was to compensate him for having to wait for his money.

The lender’s expenses in making a loan available, such as bank transfer fees or in collecting a loan, such as lawyer’s fees, are not considered ribbit.

Most authorities permit a Jew to pay interest to a corporation or bank if non-Jews own the majority of the corporation’s shares.

Raphael Grunfeld received Semichah in Yoreh Yoreh from Mesivtha Tifereth Jerusalem of America and in Yadin Yadin from Rav Dovid Feinstein, ztz’’l. A partner at the Wall Street law firm of Carter Ledyard & Milburn LLP, Raphael Grunfeld is the author of “Ner Eyal: A Guide to Seder Nashim, Nezikin, Kodashim, Taharot and Zerayim” available for purchase at www.amazon.com/dp/057816731X and “Ner Eyal: A Guide to the Laws of Shabbat and Festivals in Seder Moed” available for purchase at www.amazon.com/dp/0615118992. Questions for the author can be sent to [email protected].

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