Brokers

From writings of Harav Chaim Kohn shlita
Simonim:
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5779
16.05.2019
#459

Brokers

Q: What are the different types of brokers recognized in Halachah? What are their respective rights, responsibilities and liabilities?

A: There are three basic types of brokers:

1. One who buys in order to resell, commonly called a sarsur (C.M. 186:2).

2. One who is hired as an agent to buy or sell for his sender, such as a real-estate agent. He is considered an employee, whose wages must be paid on time, if he demands them (C.M. 185:1; 339).

3. One who mediates a deal on his own initiative, such as a shadchan. He is not considered an employee who receives payment for his labor per se; instead, the obligation to pay him is because of the benefit that the parties received from him (Rema 185:6; Gra 185:13).

The last two types are commonly referred to as metavchim (middlemen).

To each of these three types of brokers apply specific halachos, which we will discuss, be”H, in coming weeks.

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
23.05.2019
#460

Buying on Consignment (Sarsur)

Q: I received merchandise on consignment, and it was lost through oness (circumstances beyond my control). Am I liable for it?

A: A person who accepts merchandise with the express understanding of reselling can retract and return it if he does not find buyers.

While you hold the merchandise with the intention to sell, you are liable for any oness that occurs to it, since at that point you are considered a buyer (or borrower). While the merchandise is being returned, though, you are liable only as a shomer sachar (Nesivos 185:3; 186:1-2).

Similarly, if a sarsur takes the merchandise to another city to sell, if it is lost through oness on the way there, he is liable.

However, if he did not find customers and is returning with the merchandise, he is then a shomer sachar and exempt if it is lost through oness, unless it is also common to find buyers while returning (C.M. 186:2; Sma 186:4).

If the common commercial practice is otherwise, or the consignment contract states other terms, they are binding.

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
30.05.2019
#461

Defect Unknown to Sarsur

Q: I purchased an item, but did not open it until after the manufacturer’s warranty expired. It was defective. Can I demand a refund from the store owner?

A: A person who sells an item that is liable to be defective should check that it is intact. This is included in the prohibition against onaah. In principle, a defective item can be returned even if the defect is discovered years later (Prishah 228:5; Nesivos 60:4; C.M. 232:3).

Nonetheless, it is known that one who buys with intention to resell (sarsur) does not check the merchandise. Therefore, it is the customer’s responsibility to check if there is a defect.

If the customer did not check the item and there was a loss, whereas had he checked earlier and could have returned the item to the manufacturer before the warranty expired, the seller is believed that he was unaware of the defect, and the loss is the customer’s (C.M. 232:18).

In any case, the common commercial practice is to follow the warranty terms.

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
5.06.2019
#462

Additional Profit

Q: I asked my mechanic if he could sell my car for $4,000. He ultimately sold it for $4,300. Who gets the extra $300?

A: The mechanic is your agent to sell (sarsur). If the sarsur sold for more than the owner stated, the additional profit is the owner’s. However, had the sarsur initiated the sale and offered to sell on your behalf for whatever price you set, there is a dispute whether he is like any other agent and additional profit is yours, or since he initiated the sale at the price that you set, the implicit stipulation of the sarsur is that the extra is his (Beis Yosef and Bach 186:2).

If you offered the mechanic that anything beyond $4,000 would be his, even if he was silent and didn’t agree explicitly, presumably he agreed to the offer and the $300 is his. You cannot claim that he did not accept your offer. Conversely, he becomes a shomer sachar on the car (C.M. 185:4; Sma 185:5).

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
13.06.2019
#463

Guardianship of Broker

Q: Someone gave me a piece of jewelry to sell for him. It was stolen. Am I liable for the theft?

A: A broker (sarsur) who is entrusted with an item to sell becomes a guardian. We know that a paid guardian is liable for theft, whereas an unpaid guardian is not. Therefore, the question is whether you received potential benefit from tending to the sale, even if not directly for guarding the item, and even though the gain was not actualized (C.M. 291:1; 303:2).

Thus, if you were promised a fee for the sale you are a shomer sachar (paid guardian) and liable for theft. Similarly, if the owner set a price for the sale and it was agreed that if you sell for more you can keep the extra, you are a shomer sachar, since you can earn profit. Even if the owner gave you a gift, which was clearly on account of the brokerage, you become a shomer sachar (C.M. 185:1, 7; Be’er Heitev 185:4).

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
19.06.2019
#464

Deviation From Instructions

Q: I gave a jeweler a diamond to sell for at least $10,000. Two months later, he sold it for $9,000, claiming that it is worth only that much and he cannot get the price I requested. What is the halachah?

A: A broker is an agent of the owner/seller. Therefore, he is not allowed to deviate from the instructions of the seller, even though his intention is for the benefit of the seller, and even if he knows the market conditions better (C.M. 185:1).

Therefore, if the owner set a minimum price, the broker may not sell for less, even if he was unable to sell at the price the owner stated. If the sale cannot be voided, the broker is required to compensate the seller for the difference (Sma and Aruch Hashulchan 185:1; Nesivos 185:2).

Conversely, if the broker sold at a price higher than was set, even if the owner had agreed to sell below value to raise cash, the gain is the owner’s.

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
26.06.2019
#465

Responsibility

Q: What is the broker’s responsibility as a worker or agent of the seller?

A: A broker who receives a fee to sell an item is like an employee, and is required to work for the benefit of the employer, such as procuring the best price or conditions for him. If the broker deviated from the seller’s instructions, in some situations the seller can void the sale, and the broker is not entitled to his fee. If the broker caused a loss, he is liable and must compensate the seller, as discussed last week (C.M. 185:1).

If the broker took the item, but the seller retracts and no longer wants to sell, most Poskim allow him to cancel the agency, since the broker is like an agent and cannot serve against the seller’s will. Some compare the broker to a kablan employee who received an item to work on, where the owner’s right to retract is limited (Nesivos 185:3, 333:1; Minchas Pitim 185:4; Ulam Hamishpat 185:1; Chazon Ish, B.K. 23:26).

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
3.07.2019
#466

Broker Acquiring for Himself

Q: I was given an item to sell for a certain price. I decided to acquire it for myself. The price rose, and the  owner insists on my paying the higher price. I claim that I already acquired the item at the initial price. What is the halachah?

 

A: Shulchan Aruch rules that the broker cannot acquire for himself without the owner’s knowledge or agreement. This is because the agent is like the owner, and a person cannot sell to himself. However, if the owner agreed to sell to you explicitly or implicitly (through silent acknowledgment), he annulled your agency and you acquired at the initial price (C.M. 185:2; Sma 185:4).

Others maintain that the broker can acquire, since the owner’s intention is to sell to whoever will pay the set amount, including the agent, so that the agency is null when you decide to acquire (Shach 185:3; Machaneh Ephraim, Shluchim #20).

Thus, on account of the dispute, you cannot be charged the higher price, since you are in possession (Mishpat Shalom 185:2).

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
9.07.2019
#467

Broker Acquiring for Himself, Part 2

Q: I was given an item to sell. How can I acquire it for myself, even according to the first opinion mentioned last week that I am considered like the seller?

 

A: There are a number of options:

1) Notify the owner of your decision to acquire (C.M. 185:3).

2) Pay the owner, even if you don’t state that you are the buyer, since the owner intends to sell to whoever pays, so that he remains the seller (Machaneh Ephraim, Shluchim #20).

3) Some allow you to appoint an agent to acquire for you. Thus, although you are considered the “seller,” your agent can serve on your behalf as the “buyer.”

4) Some allow you to give the item to someone the owner considers trustworthy and appoint him as the agent to sell in your place. You can then acquire from him. This option is not valid regarding real estate, since real estate cannot be physically handed over, and therefore the agency cannot be transferred (Erech Shai 185:2).

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
18.07.2019
#468

Retracting From Sale by a Broker

Q: A broker arranged a sale of my item, but I would like to retract from the sale. In what cases is this possible?

A: One possibility is when the broker was not authorized to finalize the sale. If the broker was sent to find a buyer, but the price was to be negotiated directly between the buyer and seller, although the buyer confirmed with the broker about buying the item, the sale is not finalized. Both the seller and buyer can retract, since a sale is not halachically concluded without setting a price (Nesivos 185:7).

Another possibility is canceling a sale because of hakpadah. Some write that regarding something that people are typically particular about, such as a broker selling half the house that the seller lives in. If the broker sold to someone clearly known as one whom the seller does not want as a neighbor, the seller can void the sale, unless he had explicitly said, “Sell to whomever you want” (Chochmas Shlomo 185:6).

Money Matters

Brokers #10

Retracting From Sale by a Broker

(Based on writings of Harav Chaim Kohn, shlita)

 

 

 

Q:

 

A broker arranged a sale of my item, but I would like to retract from the sale. In what cases is this possible?

A:

 

One possibility is when the broker was not authorized to finalize the sale. If the broker was sent to find a buyer, but the price was to be negotiated directly between the buyer and seller, although the buyer confirmed with the broker about buying the item, the sale is not finalized. Both the seller and buyer can retract, since a sale is not halachically concluded without setting a price (Nesivos 185:7).

Another possibility is canceling a sale because of hakpadah. Some write that regarding something that people are typically particular about, such as a broker selling half the house that the seller lives in. If the broker sold to someone clearly known as one whom the seller does not want as a neighbor, the seller can void the sale, unless he had explicitly said, “Sell to whomever you want” (Chochmas Shlomo 185:6).

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Simonim:
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5779
24.07.2019
#469

Brokerage Fee

Q: Is a broker entitled to charge for expenses, in addition to his fee? Can he charge for his efforts if he did not conclude the sale?

A: This depends on the nature of the brokerage arrangement and the common practice.

A sales agent who was hired and served faithfully is like an employee; the employer (seller) is responsible to pay for his time and expenses, as is reasonable in this field, unless the practice is not to pay for expenses. Some write that if the broker stipulated an excessive fee, it includes expenses (Terumas Hadeshen #323; Minchas Pittim 264:4; Chut Hashani #2).

If a broker did not conclude the sale, there is a dispute whether he is entitled to payment for his efforts. According to most authorities, if the broker did not initially stipulate that he should be paid for his efforts, he is not entitled to anything, since many brokers toil unsuccessfully, unless the common practice is otherwise (Beis Yosef, C.M. 185:3; Rama 264:4; Mishpat Shalom 185:6).

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From writings of Harav Chaim Kohn shlita
Simonim:
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N/A
5779
31.07.2019
#470

Unsolicited Broker/Shadchan

Q: A neighbor connected me with a potential buyer for my house, and we concluded the deal. Is the neighbor entitled to a brokerage fee?

A: There is halachic basis to entitle him, but this depends on the common practice (Knesses Hagedolah, Tur, C.M. 185:6).

The obligation to pay a broker who was not solicited or hired is on account of the benefit that you receive from his services (yored lisdei chaveiro, neheneh). Therefore, he is entitled to payment for his efforts only if he brought the issue to fruition and your benefit (Gra, C.M. 87:117; 185:13).

Since zeh neheneh v’zeh lo chaser is exempt, the neighbor can demand a brokerage fee only if he had some loss, including loss of time. Thus, a casual mention of the potential buyer during a neighborly conversation would not warrant brokerage payment, unless the practice is so, as is common with shidduchim (C.M. 375:4, 363:10; Gra 363:31).

Conversely, if the practice is to pay only a certified or contracted broker, the neighbor would not be entitled.

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From writings of Harav Chaim Kohn shlita
Simonim:
Year:
Date:
Sectionnum:
N/A
5779
31.07.2019
#470

Unsolicited Broker/Shadchan

Q: A neighbor connected me with a potential buyer for my house, and we concluded the deal. Is the neighbor entitled to a brokerage fee?

A: There is halachic basis to entitle him, but this depends on the common practice (Knesses Hagedolah, Tur, C.M. 185:6).

The obligation to pay a broker who was not solicited or hired is on account of the benefit that you receive from his services (yored lisdei chaveiro, neheneh). Therefore, he is entitled to payment for his efforts only if he brought the issue to fruition and your benefit (Gra, C.M. 87:117; 185:13).

Since zeh neheneh v’zeh lo chaser is exempt, the neighbor can demand a brokerage fee only if he had some loss, including loss of time. Thus, a casual mention of the potential buyer during a neighborly conversation would not warrant brokerage payment, unless the practice is so, as is common with shidduchim (C.M. 375:4, 363:10; Gra 363:31).

Conversely, if the practice is to pay only a certified or contracted broker, the neighbor would not be entitled.

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From writings of Harav Chaim Kohn shlita
Simonim:
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5779
8.08.2019
#471

Initiating Shadchan

Q: I suggested someone to my friend. A shadchan followed through with the families in concluding the shidduch. Am I entitled to part of the shidduch fee?

A: Strictly speaking, some say that the brokerage or shadchan fee is only for closing the deal, so that the initiator is not entitled. Others say that if the initiator’s efforts were essential in enabling the shadchan to conclude the shidduch, he is entitled to part; even if an additional shadchan played an essential role in the middle, he is entitled to part of the fee (Pischei Teshuvah, C.M. 185:3).

Regardless, poskim write that the practice is to give a share to the shadchan who initiated. Some write further that the practice is to give to the initiator even if he merely suggested the name to the parties without further effort. Some add that even if others had suggested the shidduch, the initiator is entitled to his part, since the shidduch began through his efforts (Aruch Hashulchan 185:12; Pischei Choshen, Sechirus 14:8).

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From writings of Harav Chaim Kohn shlita
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5779
15.08.2019
#472

Brokerage Payment Due

Q: At what point is the brokerage or shidduch fee due?

A: Generally, agreement to the deal alone, even if the price was set, is not sufficient. The fee is due upon doing whatever is considered locally as concluding the deal. In a transaction, this is upon transferring ownership or registering the asset officially, and in a shidduch, upon marriage.

Nonetheless, everything is according to the common practice. Some write that the brokerage fee is dependent upon signing the contract, regardless of whether the ownership was transferred already or not.

There are different practices regarding shidduchim, whether the fee is due at the time of the engagement, tenna’im, or marriage. This varies with circles, and may depend on whether the shadchan’s role is just to introduce the couple or also to mediate the monetary affairs between the parents (Rama, C.M. 185:10; Responsa Halichos Yisrael #11).

The broker has no right to demand that the fee be set aside in escrow before it is due (Aruch Hashulchan 185:10).

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From writings of Harav Chaim Kohn shlita
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5779
20.08.2019
#473

Canceled Deal

Q: I brokered a deal (or made a shidduch), but the parties decided to cancel the deal (or break the shidduch). Am I still entitled to the brokerage (or shidduch) fee?

A: If the parties undid the deal after transferring ownership (or got divorced after marriage), they still owe you the fee. Even beforehand, if they retracted after the point that is considered concluding the deal or shidduch to obligate the fee (e.g., tena’im), as explained last week, you remain entitled to the fee (Rama and Taz 185:10; Shaar Ephraim, C.M.  #150).

However, if the deal was canceled because the parties discovered information which, had they known beforehand, would have prevented the deal, you must return the fee (Aruch Hashulchan, C.M. 183:13). 

If the other party asks you to intervene and try to restore the deal or shidduch that was canceled, there is a dispute whether you are required to do so. This depends partly on the reason why it was canceled (Rama 294:6; Shach 294:9; Pischei Teshuvah 294:3).

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