Rabbi Meir Orlean
Mr. Zemer led a popular band.
One day, Mr. Klausner called him. “B’ezras Hashem, we’re making a wedding after Purim and I’d like to book your band,” he said. “It’s a couple of months away, but I’d like to reserve the date.”
“I’ll put it on my calendar,” said Mr. Zemer, “but I require a 10-percent deposit to reserve the date. You can give me a check or make a transfer.”
Mr. Klausner transferred the money.
A week later, Mr. Klausner called. “I’m sorry, but I’d like to cancel the booking,” he said.
“What happened?” asked Mr. Zemer. “A change in wedding plans?”
“No,” replied Mr. Klausner. “We decided to go with another band.”
“You can’t do that,” replied Mr. Zemer. “We already reserved the date.”
“But I haven’t signed a contract yet!” objected Mr. Klausner.
“As far as I’m concerned, once we reserved the date and you make a deposit, the deal is sealed,” argued Mr. Zemer. “It’s not ethical.”
“I’m not getting into a question of ethics,” said Mr. Klausner. “I have valid reasons for canceling. Until we sign a contract the agreement is not binding; at most, you can keep the deposit money.”
“After agreeing and paying a deposit, the deal is sealed,” insisted Mr. Zemer. “I’m going to sue you for breach of contract.”
“What contract?” retorted Mr. Klausner. “There isn’t any! I’m willing to discuss the issue with Rabbi Dayan. If he says that I can’t retract after paying a deposit, I’ll leave the booking. What do you say?”
“I’m OK with that,” said Mr. Zemer.
The two came to Rabbi Dayan. “We booked a date,” said Mr. Zemer. “Can Mr. Klausner retract after paying a deposit?”
“Just as kinyanim (acts of acquisition) serve to finalize a sale, they serve to finalize a rental or hiring of services,” said Rabbi Dayan. “Many authorities maintain that payment of money serves as a kinyan to finalize a hiring” (Nesivos 333:1; Machaneh Ephraim, Sechirus #1).
“Why is that?” asked Mr. Klausner.
“Hiring is essentially renting a person’s services,” explained Rabbi Dayan. “Although Chazal annulled payment of money as a kinyan for purchase of movable items, some maintain that it remains a kinyan for rental, even of movable items. The same is true for hiring, which is rental of the person’s services” (C.M. 198:6; Pischei Teshuvah 198:8).
“Furthermore, the Gemara (Kiddushin 22b) teaches that people are compared to real estate,” continued Rabbi Dayan. “Thus, just as money is a valid kinyan for real estate, it is a valid kinyan to acquire the person for his services” (C.M. 227:33; Pischei Choshen, Sechirus, 7:2).
“Would paying a partial deposit also indicate intent to confirm the booking?” asked Mr. Zemer.
“There is a dispute regarding the intent of a deposit,” replied Rabbi Dayan. “Some maintain that the intent of a deposit is, indeed, to confirm the rental or hiring, whereas others maintain that the intent is merely to serve as a nonrefundable penalty for retracting. This can vary with time-period and location, and the context of the down payment” (see Pischei Teshuvah, C.M. 207:13; Beis Shlomo, Y.D. 2:187; Emek Hamishpat, Sechirus Batim, #32).
“What about nowadays?” asked Mr. Klausner.
“Nowadays a deposit, often called earnest money, is usually not viewed as binding until a contract is signed,” answered Rabbi Dayan. “The Gemara (Kiddushin 26a) teaches that in places where it is customary to sign a contract, payment of money alone does not confirm a real-estate acquisition. Rema qualifies that for rental, money suffices, since there is less insistence on a contract, but the common practice nowadays in many places is not to consider a rental binding until a contract is signed” (C.M. 190:9, 195:9; Aruch Hashulchan 195:13; Pischei Choshen, Sechirus 4:1).
“Thus,” concluded Rabbi Dayan, “if it is customary to view the deposit only as a penalty or to insist on a contract, Mr. Klausner can retract even after paying a deposit.”