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November 5, 2024
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Linking Northern and Central NJ, Bronx, Manhattan, Westchester and CT

Bava Metzia 50b and 56a

If you sell 34 cent postage stamps for 40 cents, you may get a nasty letter from the Attorney General. You will also have violated a Torah law.

Price gouging is referred to in the Torah as אונאה   ona’ah. “If you sell to your neighbor or buy from your neighbor, you shall not defraud one another.” The Torah prohibits the sale or purchase of an item at a price more than, in the case of a sale, and less than, in the case of a purchase, the regulated price or the market price for the item in a given place at a given time.

The remedies available in Halachah to the victim of ona’ah depend on the extent of the ona’ah.

If the price hike was less than one-sixth (16.66%) there is no remedy and the victim must absorb the loss.

If the price hike was exactly 16.66% the aggrieved party has the right to demand the return of the overpayment.

If the price hike was more than 16.66%, the sale is deemed null and void. The aggrieved party is entitled to the return of the full purchase price paid or the return of the item as the case may be. Alternatively, the aggrieved party (but not the offender) has the option to confirm the transaction.

Unlike in the days of the Talmud, today, fixed prices are rare and each store may charge a different price for the same item. Accordingly, except for a few isolated instances of fixed prices, such as the price of stamps, the middle level of ona’ah of exactly 16.66% is largely inapplicable today.

The right to a refund or to the return of the purchase price or the item, as the case may be, is subject to a time limit. This right expires and is deemed to have been waived after the victim allowed sufficient time to elapse before bringing his claim, during which time he could have investigated the true price by checking with other stores or with his friends and family.

Some items are not subject to the laws of ona’ah at all. Included in this category of “ona’ah exempt items” are land and documents, such as promissory notes, which have no intrinsic value but merely attest to the existence of an underlying value. Included also in this category of ona’ah exempt items are items that have no fixed price but whose price is determined by on the spot mutual bargaining such as etrogim on Succot as well as antiques and collectibles. For the same reason, the laws of ona’ah do not apply to auctions.

As with all monetary matters, the parties may stipulate in advance, that as between them in a given transaction, the laws of ona’ah shall not apply. But the stipulation must be specific and the amount of the overcharge must be articulated and mutually agreed to.

All of the above applies to situations in which the buyer and seller themselves are parties to the transaction. If a buyer or seller appoints an agent or if a court appoints a guardian to enter into a transaction on behalf of the principal or minor as the case may be, then the sale may be canceled for any deviation in price, even less than 16.66%. This is because the terms of the agency are breached and the agent has no authority to bind his principal to the unauthorized transaction.

Not only do deceitful transactions hurt people but also deceitful words. Ona’at devarim, hurtful words, cause suffering and are regulated in halacha by their own set of rules.


Raphael Grunfeld received semicha in Yoreh Yoreh from Mesivtha Tifereth Jerusalem of America and in Yadin Yadin from Rav Dovid Feinstein, zt’’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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