Payment For Damage to A Used Item

Question:

My wife gave her used sheitel to a sheitel macher to service. We hadn’t heard anything for a while, and now she has finally admitted that she lost it. How much does she owe us?

Will everyone agree with your analysis? Is the same method used for valuing damaged items as for assessing lost items?

Answer:

The sheitel macher is a shomeres sochor and must pay the value of the item she took responsibility for. Since it was a used sheitel when she accepted responsibility for it, she has to pay you the value of a used sheitel.

What is the value of a used sheitel? There are three possible ways to determine it.

1. Market price: How much is it worth on the open market?
2. Depreciation: How much would it cost brand new? How long is this type of sheitel expected to last? How long had it been used? The value of the sheitel is calculated based on its age compared with its expected lifetime.
3. Trade-in value: To be explained.

In my opinion, neither of the first two approaches is an accurate way of appraising a used sheitel, but I mention them because there may be others who would decide to use one of them. You cannot be sure that the respondent to your claim will look at it the way I present here.

Valuation according to the current market price is outdated. Centuries ago people regularly bought used items and there was a thriving market for them. Thus, the true value of the used item was reflected in the market price. Nowadays, the price you can get for a used item on eBay or in a flea market does not truly reflect the price of the used item. The item may be much more valuable to the owner than what he could get for it were he to sell it. Because new items are readily available at a relatively inexpensive price, the owner is unlikely to consider purchasing a used item on the open market.

Of course, this depends on the type of item. There is a real market for used refrigerators, cars and furniture, so this method is appropriate for such things.

Determining the lifetime of an item and how much was paid for it comes closer to an accurate appraisal. However, the assumption that the rate of depreciation is uniform throughout the product’s lifetime is incorrect. Usually a product will lose the most value as soon as it is first used. There are also other accelerations and decelerations in depreciation that make such a system inaccurate.

The best way to figure out the value of most used items is to find out how much most people would pay to trade in that item and upgrade to a brand new item of the exact same model.

If you know how much a brand new item of the same type costs, and you know how much the person is prepared to pay in addition to giving up the item he has, you can calculate how much that item is worth. Just subtract the value he is prepared to pay from the price of the new item and you have the value of the item he traded in.

For example, if the new sheitel was sold for $1800, and another $600 was spent to add hair, dye, cut and wash the sheitel, the total cost of a new sheitel with all the features of the one that was lost is $2400.

Let’s say the sheitel had been used for a year and the owner was quite happy with it. She would not have been interested in paying another $2400 for a new one. But if they could trade in her old one and add $50, would most people do so? If so, the sheitel is not worth more than $2350. If most people would pay $100 and trade in the old sheitel, then it is worth no more than $2300. If most people would add $700 and no more, then you know that you have reached the true value of the sheitel. The sheitel is worth $1700, since people will add only $700 and no more to it to get one worth $2400.

Some points to remember when making trade-in value calculations:

1. Every person has his or her own personal trade-in value. Halochoh tries to determine the objective value of the item. Therefore, it is incorrect to consider the personal trade-in value for the individual making the claim. It is important to figure out the objective trade-in value, i.e., how muchmost people would pay to trade in this item for a new one of the same type. Whatever that figure is, subtract it from the price of the new item to obtain the objective value of the used one.
2. This method is appropriate for any situation in which valuation of a used item is mandated. Whether the item was given to a craftsman to service and the craftsman lost it or whether someone damaged someone else’s used item, the above formula may be used.
3. There are some exceptions. Regarding damages, the trade-in value method is valid only when the item is meant not for sale but for personal use.
4. If the item can be repaired, the person who damaged it only has to fix it and need not pay more than the cost of the repair.
5. If the damage is insignificant in terms of further use and is not usually repaired (e.g., a small scratch on the bumper of a used car), it is valued at less than aperutah and the mazik owes nothing.
6. If the item was meant for commercial use and due to the cosmetic damage is unsalable or is reduced in value, that is considered real damage to the seller and the projected loss to the seller should be calculated. The potential loss of profit is the value of the damage.
7. When the item is significantly damaged to the point where it is less usable than before and the damage cannot be easily corrected (for a price less than whatever the value of the damage will turn out to be), the above method of valuation is appropriate. For example, Susan borrowed a used dress from Devorah that was worth NIS 1000 when new. She snagged it, and she also washed it incorrectly and the color faded. Neither of these problems can be corrected. The dress can still be worn, but it is not as attractive as before and is therefore less valuable. In this case, Devorah can claim from Susan the amount of damage she caused. First one has to calculate how much the dress was worth before the damage took place. One would need to ask women how much they would pay to trade in the used dress and get a new one of that type. Let’s say they would pay no more than NIS 200. That means the value of the used dress before it was damaged was NIS 800. After the dress was ruined, how much would most women pay to get a new dress and forfeit the snagged, discolored one? If they would pay up to NIS 550, then the value of the damaged dress is NIS 450. The amount of damage done to the dress is NIS 350. Thus, NIS 350 is the amount Devorah can claim from Susan.