No Sale – Return Without Liability!

Question

Baila would like to help the family
budget by selling clothes from home. She finds an importer of children’s
dresses who is prepared to give her goods to sell. He makes the following
two conditions: (a) the dresses, which are worth 50 shekel wholesale, must
be sold for a minimum of 70 shekel. Any profit in excess of this amount is
for Baila to keep; (b) if she is unsuccessful in selling the goods, she
may return them without liability. Is this arrangement free of any ribbis
problems?


Answer

When a person receives goods to sell and the supplier
insists on a share of the profit, what has the recipient actually
received? Do we say that he has in effect received a loan of goods which
have a monetary value? If so, there would be a problem of ribbis if
he pays back more than he received, which is what is expected. Let us say
that the goods were worth $1000 at the time of receipt and that the
supplier expects at least $1200 in return. The extra $200 would be
forbidden interest on a $1000 loan. Alternatively, we could argue that the
goods are not regarded as a loan, but rather as a deposit until such time
as they are either sold or returned. Only when the recipient sells the
goods and thereby converts them into cash do we say that the liquidated
goods are a loan. Since the amount received for the goods presumably
exceeds the amount the supplier expects to receive, there is no ribbis
problem.

How do we determine the status of the recipient? The
answer, says the Shach (Yoreh Deah 173:14, Note 29),
is that we look at the degree of responsibility that the recipient has for
the goods. If he is only liable for theft and loss, the goods are regarded
as a deposit. The recipient has the liability of a shomer sochor (a
paid watchman), the “payment” being the option of selling the goods
and making a profit. Only when he converts the goods into money by selling
them, do we say that the amount the supplier expects in payment becomes a
loan. Thus, such an arrangement would not pose any ribbis problem.
However, should the recipient be liable even for accidental loss from the
time he receives the goods, his status is different. We would then
consider him as having received a monetary loan to the present value of
these goods. Since he has an obligation to repay a higher value than he
received (his repayment must include a guaranteed share of the profit),
such an arrangement would infringe the laws of ribbis. One could
only enter into this deal if a suitable heter iska had previously
been drawn up.

Even if the recipient were only liable for theft or
loss, it would seem that such an arrangement is not free of pitfalls. What
would happen if he were in urgent need of cash and therefore decided to
sell the goods at a loss (to himself)? In the case described above, Baila
must pay the supplier 70 shekel. What happens if she decides to sell for
65? Since she receives a “loan” of 65 but must return 70, it appears
as if interest is being paid on the loan. Indeed, for this reason, the Shulchan
Oruch Harav
forbids such a transaction (agar natar). However,
the Levush states that one can ignore the fact that the recipient
received less than he has to pay back. The fact that he sold the goods for
less than their market value is his own fault (ihu d’afsid anafshay).
See Bris Yehudah (Chapter 22, Note 29) for further explanation.

We can therefore conclude that as long as Baila is only
responsible for theft or loss and sells for the supplier’s minimum
price, there is no problem. Otherwise, a competent halachic authority must
be consulted.