One of the primary considerations in any transaction is the presence of prior knowledge. Continuing our series on the laws of Onaah, this week we will address the question of prior knowledge and the issue of whether and how the Onaah prohibition can be circumvented.
Faced with a claim of Onaah, a common counterclaim is that the other party knew precisely what he was doing. If the buyer (for instance) knew that he was paying more than the market price, perhaps, he cannot later claim that he was tricked and demand his money back.
In fact, however, this is anything but simple, as we will show. Can a claim of Onaah be made even when the injured party was aware of the price gap? Does this depend on the extent of the disparity from the market price? Can parties agree that the principles of Onaah will not apply to their case? These questions, and others, are discussed below.
Knowledge and Onaah
The Gemara (Bava Metzia 51a) relates the following case: A particular individual proclaimed goods for sale, pricing his wares at six Zuz per item. However, the market price of the goods was five Zuz, rather than six.
A passer-by, interested in purchasing the goods but not in being overpriced, made a quick calculation. He knew that were he to offer the salesman five and a half Zuz, the seller would accept the offer. In that case, however, the overcharging would amount to half a Zuz, which is less than one-sixth of the market price. Therefore, the buyer would be unable to claim any money back, because Onaah of less than one-sixth cannot be reclaimed.
He thus decided that he would pay the seller the full asking price of six Zuz. By ensuring that there is in fact a precise amount of Onaah—one-sixth of the market price—the buyer could buy the desired item and later claim back the extra money.
In that case, the Gemara concludes that the buyer may not claim Onaah (claim the extra Zuz back), because the salesman was an individual selling personal wares, and not a professional salesman selling commercial goods. Because of the personal aspect of the sale, the laws of Onaah do not apply. But barring this additional factor, the Talmudic passage implies that the buyer’s strategy is in fact legitimate: he can keep the purchased goods, and also claim the overcharged sum of money.
We learn from here that even when the buyer or seller is aware of the unfair price of the transaction, the claim of Onaah is not automatically foregone. This ruling is given by the Mordechai (Bava Metziah no. 307), and cited by the Rema (Choshen Mishpat 227:7).
The Time Limit Problem
The principle noted above appears to clash with another fundamental tenet of Onaah law. The Mishnah (Bava Metzia 49b) rules that a time limit applies to the claim of Onaah following an overpriced transaction: One can only claim back the overcharged amount within the time it takes to “show [the purchase] to a merchant, or to a relative.” This is ruled by the Rambam and the Shulchan Aruch (227:7).
The reasoning behind this ruling, as given by Rashi, is that after the time it takes to show the purchase to an expert, we assume that the buyer has indeed done so, and is therefore aware of his having been cheated. If, in spite of this awareness, the buyer does not make a claim to be reimbursed, we assume that he has foregone his claim to receive his money back.
We learn from the Mishnah that as soon as a buyer knows he’s been cheated, if he does not claim the money as he rightfully can, we can assume that he has foregone his claim—and he indeed loses his right of claim. If this is the case, how can someone who knows from the outset that he is being cheated, and nevertheless goes ahead with the transaction, claim any money? If finding out about the fraud a posteriori negates the legal claim of Onaah, how can someone make the claim if he knew about the fraud a priori?
The Bach (Choshen Mishpat 227:9; the Bach is bothered by a further difficulty) provides a solution to this, stating that the buyer can only claim back his overpaid money if he initially informed witnesses of his intention to do so. If there was no declaration before witnesses, we assume that if he knew about the discrepancy in price, his intention was indeed to forego his right to claim Onaah.
Note that this declaration cannot overrule the time limit for making Onaah claims: After the transaction has been completed, Chazal instituted a final time limit for making claims, which applies universally. With the exception of special circumstances (which we will discuss elsewhere), a declaration of future intent is of no avail in extending the time limit for making claims.
This solution, however, is somewhat strained. The Gemara makes no mention of the fact that the buyer informed witnesses of his intentions prior to making the purchase. The Ketzos Hachoshen (227:5) adds that if we assume that the buyer foregoes his right to claim Onaah, a declaration alone cannot suffice to maintain the right to claim. Although there is room to debate this argument (see Nesivos 227:4), the consensus of authorities is to reject the solution of the Bach.
Paying and Claiming
An alternative solution, as given by the Nesivos Hamishpat (227:4), to the apparent contradiction, is that buying an item for a knowingly inflated price does not indicate one’s waiver of Onaah claims. Because the Torah set down the laws of Onaah, it follows that one may willingly pay one sixth over the market price, in the knowledge that he can turn to Beis Din to retrieve the overcharged money. The purchase for the higher price is therefore not proof of one’s foregoing the right to future claim.
After the Onaah offense has been perpetrated, however, and after enough time has elapsed for the victim to find out the fraud, the lack of a claim is a sure sign of one’s having waived the claim. Chazal assume that if somebody wishes to get his money back, he does so promptly. (The Nesivos explains that this is because he stands to lose in Beis Din.)
According to this reasoning, one can only reserve the right to future claims in cases of overcharging by exactly one-sixth, since in this case the money can be reclaimed after the transaction is completed. In cases where the overcharging exceeds one sixth, one cannot say that he wished to first complete the purchase, and only then to reclaim the overcharged sum, since Onaah over one-sixth one does not raise a claim to get the money back, but only to void the sale. It is unreasonable to make a purchase only to later void the transaction, so that in this case paying the higher price will indicate one’s waiver of the Onaah claim.
The Taz (see Nesivos Hamishpat 227:4, who explains his position), applies this reasoning and rules that when overcharging exceeds one-sixth, and the buyer knew about the price fraud in advance of the transaction, he foregoes his right to future claims. The Sema (227:18), however, is unsure about this.
It can perhaps be suggested that a buyer assumes the seller will prefer to refund the difference in price, satisfying himself with the market price rather than entirely voiding transaction. Because this assumption is possible, there is no proof that the buyer intended to waive his right of claim: Although his halachic right is to void the transaction (in which case there is no logic to the decision to make the transaction), he may assume that the seller will (or at least might) prefer to refund the extra money rather than void the transaction. Under this assumption, the transaction is worthwhile.
It is therefore clear that according to most opinions, prior knowledge of unfair pricing does not negate the right to make an Onaah claim. The seller cannot tell the buyer “you should have known better”—though as we have seen, if the amount of overcharging exceeds one-sixth authorities debate whether this Halacha applies.
If prior knowledge does not help, can parties to a transaction circumvent potential Onaah claims? The natural course of action is to stipulate, at the time of making the transaction, that it should be free from the prohibition and laws of Onaah. This, however, is not a simple matter.
Stipulating Against Onaah
The Gemara (Bava Metzia 51a) cites a dispute among Amoraim concerning somebody who stipulates that a particular transaction should be free of Onaah law. According to Rav, the stipulation is ineffective. Although generally in monetary matters one may “make a condition against the Torah,” in this case the condition is not valid, because the victim is unaware that he is being cheated, and therefore does not waive his right to claim Onaah. Shmuel, however, maintains that the stipulation is binding.
The Shulchan Aruch (Choshen Mishpat 227:21), following most early authorities, rules in accordance with Rav, so that an Onaah stipulation is not binding. In the event that the stipulation was made, the Shulchan Aruch rules that the ordinary laws of Onaah apply. The Ketzos Hachoshen (227:9) adds that although the condition is essentially ineffective, it nevertheless gives the parties the right to entirely annul the transaction in the event that the other party makes a claim of Onaah (see also Nesivos Haishpat 13; Sema 38, based on Rashi and Tur). Either way, the prohibition of Onaah remains in force.
Based on the explanation given by the Gemara—that the victim is unaware of the fraud, and therefore cannot waive it—the Gemara (51b, citing a baraisa) presents an option of stipulation that is valid in waiving the prohibition. If the seller first informs the buyer that there is a particular amount of Onaah in the transaction (for instance, that the item he is selling for two hundred is in fact worth only one hundred according to market value), and then makes the stipulation that there should be no claim of Onaah, the condition is valid and binding.
The Shulchan Aruch (227:21) makes this ruling, adding that care should be taken to stipulate that the buyer has no claim of Onaah (so that he waives his right), and not to say that the laws of Onaah should not apply: the latter stipulation is entirely ineffective—one cannot stipulate to nullify the laws of the Torah.
The Shulchan Aruch (227:22) rules further that this is only true if the initial declaration of the amount of Onaah involved is precise, meaning that the perpetrator specifies how much Onaah is being charged. A general declaration that there is Onaah (overcharging) does not suffice to circumvent the Torah laws.
Other authorities debate this issue (see Imrei Binah, Dayanim 20:18), suggesting that it is sufficient to declare that there is an amount of Onaah in the sale, without specifying the precise sum. This seems to be a minority opinion, so that the practical Halacha, however will follow the clear ruling of the Shulchan Aruch).
Waiving One’s Right
The Nesivos Hamishpat (227:13) gives an additional option of how to solve the Onaah problem, when both parties agree to it.
He explains that the stipulation the Gemara refers to is a “condition” that there should be no claim of Onaah against the seller. If, however, an explicit condition is made to the effect that the buyer waives any Onaah claim, this is also be sufficient to permit the transaction, without transgressing the prohibition of Onaah.
In the event that there is Onaah (overpricing), the buyer will then have a choice: he can waive right to claim Onaah, in line with the declaration initially made. If, alternatively, he decides to claim Onaah, the transaction will automatically be voided. Because the original transaction was made “on condition” that the buyer waives his claims, it follows that if he does not waive the claim, the entire transaction is voided.
This presents a seller with a more agreeable method of making a condition, which can be written into a contract, namely that the transaction is made on condition that the buyer waives his right to any claim of Onaah. The buyer will generally not claim Onaah, because he is prepared to pay an inflated sum, and claiming Onaah will result in voiding the transaction. Because he willingly waives any Onaah, no prohibition is incurred.
It is noteworthy that the Shulchan Aruch HaRav writes that making such a stipulation is permitted even on a lechatchilah level.