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Vayeishev-Lent Shekels in Israel to be Repaid Dollars in the U.S.

 

Question

I have a sister who lives in the U.S. and I live in Israel. My sister needs money in Israel every month. I have a dollar account in the U.S. and am interested in being repaid by having my sister deposit dollars into my dollar account which is also convenient for my sister. Since we both want money where the other lives, we use the official rate as our rate of exchange. However, I pay her expenses in Israel on the first of the month since that is when her bills are due and she pays me half on the first of the month and half on the fifteenth since that is when her salary is paid. We were wondering if there is an issue of ribbis because if the dollar appreciates in the interim, she will end up paying me on the fifteenth more in terms of shekalim than I lent her. Is there indeed an issue and if yes is there a solution?

Answer

The first point that bears mentioning is that even though both shekels and dollars are legal tender in their respective counties, nevertheless they are different and therefore, you are dealing with two different objects both of which are legal tender in their respective countries and just objects in other countries.

Usually when one repays with the same object as the object which he received, we view the exchange as a loan. When one repays with a different object, we view the exchange as a sale. However, this is not a definitive distinguishing characteristic in Jewish law because we do find cases where one repays a different object and yet the exchange is characterized as a loan. We also find cases where one repays the same type of object and yet the exchange is legally considered as a sale. Characterizing your exchange is critical because the laws for loans and sales are different and only after we classify your deal with your sister can we render a decision.

We note that even when one lends an object to be repaid with the same amount of the same object at a later date there is an issue of ribbis. Even though there is no Biblical transgression, the Rabbonon forbade this type of transaction since if the value of the object rises in the interim it resembles interest because the monetary value of what is repaid is greater than the value of what was lent. This is known as halvo'as so'o beso'o. (The laws are found in YD 162.)  Since this issue of ribbis is rabbinic, the rabbis incorporated various leniencies. One leniency is that if in addition to the object that he is borrowing the borrower already has some amount of this object, the loan is permitted.

A case where repayment is made with something different than what was lent and is nevertheless characterized as a loan is discussed in the Mishna (BM 75A). The Mishna rules that two people may make an agreement that A will weed for B today and B will weed for A at a later date if the work conditions are the same on both days. However, they may not agree that A will weed for B today and in return B will hoe for A at a later date even if the pay for both of these activities is identical at the time when they made their deal. The reason is that we fear that perhaps when B hoes for A the salary for hoeing will be higher than it was when A weeded for B. Thus, even though the jobs are different, Torah law considers the exchange as a loan and forbids this deal.

From this Mishna the Sefer Haterumos (46, 5) derives that A may not lend B wheat for an equally valued amount of millet to be paid back at a later date since we fear that at the time of repayment the value of the millet will be more than what it was when A lent the wheat to B. This is the ruling of the Ramo (YD 162, 5). The Ramo states that in this situation the law is even stricter than if the deal calls for repayment with the same of type of object as the object lent, since the leniencies that exist when one agrees to repay with the same type of object do not exist if the deal calls for the borrower to repay with a different object. Thus, the Ramo rules that A may not lend B wheat in order to be paid back an amount of millet whose value is equal to the price of the wheat at the time that the loan was extended, even if the borrower himself had that amount of millet at the time that he received the wheat.

Thus, it seems that your arrangement may violate the laws of ribbis since dollars are not legal tender in Israel where you live and are thus legally considered an object like millet. Since you do not give your sister dollars it seems that your arrangement violates this law of ribbis since there are no leniencies in this situation. Therefore, even if your sister has dollars on the first of the month when you extend her the loan, there will be an issue of ribbis and if the dollar rises in value between the first and fifteenth you could only receive the amount of dollars that the shekalim that you gave her on the first are worth on the fifteenth.

What we wrote is correct if you and your sister define your deal as a dollar loan. However, there is an alternate approach that will avoid the problem and will allow you to receive on the fifteenth the amount of dollars that your shekalim were worth on the first.

The source of this alternate approach is the Taz (162, 9). He asks that the ruling of the Ramo where wheat was loaned to be repaid with millet seems to be contradicted by a later ruling of SA (163, 2) in a slightly different situation. The second ruling (which is based on the Mishna (BM 60B)) is that one who borrows wheat to be repaid with wheat is allowed to postpone repayment of the wheat and instead to pay at a later date an amount of wine that is equal in value to the wheat at the time when they agreed to convert the loan from a wheat loan to a wine loan, if the borrower had wine at the time of the conversion.

The reason this is a contradiction is because what essentially transpired on the day of the conversion is that the borrower borrowed the wheat that he was due to repay at that time and made an agreement with the lender that he will, at a later date, repay his wheat loan with wine of equal value on the day of conversion and the law is that this arrangement is permitted if the borrower owns wine on the day of conversion. Thus, this ruling seems to contradict the Ramo's ruling that one may not borrow one object and repay with a different object under any circumstances.

The Taz answers that both rulings are correct. The reason the Mishna and SA rule that the borrower may return wine is because the one who owed wheat did not convert the loan of wheat into a loan of wine, but rather sold wine to the one to whom he owed wheat. The lender agreed to use the obligation that the borrower has to repay wheat, as prepayment for wine that the borrower will give to him at a future date. R. Akiva Eiger notes (glosses to this Taz) that the Shach (173, 16) agrees with the Taz and this is the accepted approach.

The Taz thus teaches us that one who wishes to later receive one object in exchange for another that he is giving now, has two ways to accomplish this: He can define the deal as a loan of one object to be repaid by another, or he can buy the object he wishes to receive and use the object that he is giving now as prepayment for that object. As we have seen, the first approach as a loan is forbidden because it is rabbinic ribbis that cannot be circumvented. We will examine if the second approach has any ribbis issues.

When one prepays for something that he will receive at a later date, there also may be an issue of rabbinic ribbis. If the price of the object is higher at the time when it is received than at the time of the original transaction, it appears that the customer got interest since he earned money by prepaying. It appears that the one who prepaid lent the seller the amount that he prepaid and later received more value when he received the object. However, prepaying is permitted (YD 173, 7) if at the time of prepayment, the seller already owns the object he is obligating himself to give to his customer. Separately, if at the time of the prepayment there is an established price for the object that is being sold, prepayment at that price is also permitted.

Returning to your situation, you and your sister should explicitly agree that when you pay her bills on the first of the month, the shekalim that are above the shekel value of the dollars that she will deposit in your account on the first, will serve as prepayment for the amount of dollars that they are worth on the first, which she will deposit in your account on the fifteenth. The only condition that she must fulfill is that she must own on the first the amount of dollars that she will give you on the fifteenth. Some opinions (e.g., Rav Wosner zatsal in Shevet Halevi 3, 109) maintain that even this condition is not necessary since there is a shekel-dollar exchange rate, but many disagree because the rate constantly fluctuates. To cover the stricter opinions, she should make sure that she owns on the first of the month the amount of dollars that she will need to deposit into your account on the fifteenth.

You should be aware that there are additional ramifications from defining your deal with your sister as a sale rather than as a loan, but they do not pose a problem for you. The Chavos Da'as (161, 1) writes that a distinction between a loan and a sale is that in a loan the borrower is legally obligated to give his lender the object he agreed to pay him if he owns that object at the time of repayment. However, in a sale the customer cannot force the seller to give him the object that he originally agreed to give him, even if the seller owns the object at that time. The seller would be cursed by beis din with a curse known as a mee shepora, but beis din cannot legally force the seller to surrender the object to his customer. Since this doesn't pose an issue in your case you should agree to define your deal as a sale.

In conclusion: You and your sister should make an agreement that the shekalim that she does not repay on the first, will serve as prepayment for their dollar value on the first, which she will deposit in your account on the fifteenth.

 

 

 

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