Author Archives: Professor Nahum Rakover

About Professor Nahum Rakover

Professor Nahum Rakover, former Deputy Attorney General of the State of Israel, is a leading scholar in the field of Jewish law and has written widely on Jewish legal topics. He compiled The Multi-Language Bibliography of Jewish Law.

Misrepresentation and Fraud in Jewish Law

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Reprinted with permission from Ethics in the Market Place: A Jewish Perspective, published by The Library of Jewish Law, 2000, where extensive notes supplement the text presented here.

Misrepresentation Tops the Theft List

Jewish law takes a very strict approach to misrepresentation and fraud in commerce. In the Tosefta (Bava Kama 7:8) we read: “There are seven types of thief. First and foremost among them is one who misrepresents.”

Maimonides writes: “It is forbidden to deceive people in buying and selling or to deceive them by creating a false impression…. If one knows that an article he is selling has a defect, he must inform the buyer about it. It is forbidden to deceive people even by words.” (Mishneh Torah, Laws of Sale 18:1)

The prohibition applies even where the purchaser suffers no economic loss as a result of the misrepresentation.

A number of prohibitions regarding commercial transactions have been established on the basis of the prohibition of misrepresentation:

Used Goods Should Look Used

Goods may not be dressed-up so as to mislead the customer to think they are better than they really are:

“One should not dress up… an animal or old vessels so that they appear new; but he may dress up new ones by polishing, ironing, or beautifying them all they require.” (Mishneh Torah, Laws of Sale 18:2)

It is permitted to remove waste from grain in order to make its appearance more pleasing, but it is forbidden to remove waste from the top and leave it at the bottom. (Mishneh Torah, Laws of Sale 18:4)

Deceptive Grade Mixtures Are Prohibited

It is forbidden to mix merchandise of higher quality with merchandise of lower quality and to sell the entire mixture as the former. If, however, the nature of the mixture is readily apparent, it is permitted, since there is no deception:

“If the taste of each of the wines can be distinguished, it is permissible to mix them anywhere, because everything which can be distinguished will be detected by the purchaser and it is therefore permissible.” (Mishneh Torah, Laws of Sale 18:5)

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Fraudulent Pricing in Jewish Law

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Reprinted with permission from Ethics in the Market Place: A Jewish Perspective, published by The Library of Jewish Law, 2000, where extensive notes supplement the text presented here.Rakover uses the term “over-reaching” where most of us would say “overcharging.” The reason for the exception made for real-estate sales (see below) is debated in Jewish legal literature, with one opinion being that land is an inexhaustible resource and therefore people are willing to pay extremely high prices for it.

The Prohibition and its Result

The biblical term ona’ah — variously translated as overreaching or fraudulent pricing — is used in two different ways in Jewish legal sources. In the first use, the term refers to the prohibition itself:

It is forbidden for a seller or a buyer to defraud his fellow, as is said (Leviticus 25:14): “And if you sell anything to your neighbor or buy of your neighbor’s hand, you shall not wrong one another.” (See Sefer Ha-hinukh, commandment 337.)

In the second use, the term refers to the effect of the prohibited act upon the monetary rights of the victim vis-a-vis the perpetrator:

Whether one overreaches knowingly or is not aware that there is any fraud [ona’ah] in this sale, he is obligated [to make restitution]. (Maimonides, Mishneh Torah, Laws of Sale 12:1)

Protection against overreaching is granted to the consumer in the form of a monetary remedy: the defrauding merchant has to refund the difference between the market value of the item and the amount paid. Moreover, when the fraud amounts to more than one sixth of the market value of the item, the seller may face cancellation of the entire transaction. On the other hand, when the difference between the market value and the amount paid is small — less than one sixth of the market value — there are no monetary consequences for overreaching. Thus, only transactions where the amount of overreaching was small were treated as final:

“How much does the overreaching have to amount to in order that he who committed it shall be obligated to repay it? A sixth of the value of the article… constitutes fraud in which the transaction is valid but the defrauder has to pay the entire difference to the aggrieved party. If the overreaching amounts to anything less than that, the defrauder is not obligated to repay anything, because it is the general custom to waive the right to frauds amounting to less than a sixth. If the overreaching amounts to anything more than a sixth…, the transaction is void and the aggrieved party may return the article and not buy it at all. The defrauder, however, may not retract if the aggrieved party wishes the transaction to stand….” (Maimonides, Mishneh Torah, Laws of Sale 12:2-4)

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Price Regulation in Jewish Law

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Jewish civil law has not been in force for several centuries in most places in the world. (Israeli civil law takes note of precedents from Jewish law but is not bound by them alone.) As a result, in this area as in others, Jewish law has not kept pace with many aspects of the changes in the markets for goods and services since Talmudic and medieval times. Principles can be discerned in that earlier legislation, however, that could guide one to a theory of Jewish practice and even to a renewed and expanded body of law applicable to our contemporary situation. Reprinted with permission from Ethics in the Market Place: A Jewish Perspective, published by The Library of Jewish Law, 2000, where extensive notes supplement the text presented here.

Is Price Control Good?

In the Talmud, we find varying opinions on whether it is desirable to impose price controls. While the baraita [mishnaic statement from the early rabbinic period] that treats the subject establishes that

‘"market officers are appointed to [supervise] measures, but no such officers are appointed for [supervising] prices,"

it is followed by the opinion that

"market officers are appointed to [supervise] both measures and prices, on account of deceivers."  (Babylonian Talmud Bava Batra 89a)

In Babylonia, the question of price controls was subject to a disagreement between the Exilarch [the political leader of Babylonian Jewry] and the [Talmudic] Sages. The Babylonian Talmud (Bava Batra 99a) tells that the Exilarch appointed market officers to supervise prices as well as measures. The Jerusalem Talmud (Bava Batra 5:5, folio 15a) relates that the Amora [that is, post-Mishnaic rabbinic sage] Rav was appointed as market officer by the Exilarch and that since he administered punishment for infractions concerning weights and measures but not for infractions of price controls, the Exilarch had him imprisoned.

An explanation of the opinion that market officers are not appointed to supervise prices may be found in the commentary of Rashbam [Rabbi Samuel ben Meir, twelfth century commentator from Northern France]:

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Weights and Measures in Jewish Law

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Reprinted with permission from Ethics in the Market Place: A Jewish Perspective, published by The Library of Jewish Law, 2000, where extensive notes supplement the text presented here.

The Prohibition and its Source

In the [article, “Consumer Protection in Jewish Law: An Introduction,”] we cited the biblical sources for the prohibition against using defective weights and measures.

Defective weights and measures are discussed by [twelfth-century Spanish/North African philosopher and rabbi Moses ]Maimonides in his Laws of Theft:

“If one weighs with weights that are deficient by the standards agreed upon in his locality, or measures with a measuring vessel deficient by the agreed standards, he violates a negative commandment, for Scripture states (Leviticus 19:35), ‘You shall do no unrighteousness in judgment, in length, in weight, or in measure. (Maimonides, Mishneh Torah, Laws of Theft, 7:1)

“Similarly in measurement of land, if one deceives another when measuring land, he violates a negative commandment, for when Scripture says, ‘You shall do no unrighteousness in judgment, in length,’ ‘in length’ refers to land measurement.” (Maimonides, Mishneh Torah, Laws of Theft, 7:9)

Possession of Bad Weights and Measures

It is forbidden to keep a defective measuring device in one’s possession, even if it is not being used:

“Whoever keeps in his house or in his shop a false measure or weight violates a negative commandment, for Scripture states (Deuteronomy 25:13), ‘You shall not have in your bag diverse weights.’” (Maimonides, Mishneh Torah, Laws of Theft, 7:3)

For Clear and Standard Measures

Standard weights and measures are not to be prescribed unless gradations are readily apparent. Concerning this regulation, [Yehiel Michal Halevi Epstein, nineteenth-century author of] Arukh HaShulhan writes:

“The Sages established that measures should be so designed as to be recognizable at a glance, so there will be no mistakes and they will not be interchanged.” (Arukh HaShulhan, Hoshen Mishpat 231:4)

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Consumer Protection in Jewish Law

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Reprinted with permission from Ethics in the Market Place: A Jewish Perspective, published by The Library of Jewish Law, 2000.

In Jewish law, consumer protection is rooted in prohibitions against overreaching and misrepresentation, regulation of weights and measures, and enactments for the prevention of unfair price increases and profiteering.

The Bible (Leviticus 25:14-17) contains a prohibition against ona’ah — fraudulent pricing or overreaching:

“And if you sell anything to your neighbor or buy of your neighbor’s hand, you shall not wrong one another. According to the number of years after the jubilee shall you buy of your neighbor, and according to the number of years of the crops he shall sell to you. According to the multitude of the years shall you increase the price thereof, and according to the fewness of the years you shall diminish the price of it; for a number of crops does he sell to you. And you shall not wrong one another; but you shall fear your God; for I am the Lord your God.”

Elsewhere (Deuteronomy 25:13-16), the Bible discusses weights and measures:

“You shall not have in your bag diverse weights, a great and a small. You shall not have in your house diverse measures, a great and a small. A perfect and just measure shall you have; that your days may be long upon the land which the Lord your God gives you. For all that do such things, even all that do unrighteously, are an abomination to the Lord your God.”

Amos (8:4-7), too, prophesied concerning those of his contemporaries who engaged in unfair market practices:

“Hear this, 0 you that would swallow the needy, and destroy the poor of the land, saying: ‘When will the new moon be gone, that we may sell grain, and the Sabbath, that we may set forth corn, making the efah [a measure for grain] small and the shekel [measure for silver] great and falsifying the balances of deceit; that we may buy the poor for silver, and the needy for a pair of shoes, and sell the refuse of the corn?’ The Lord has sworn by the pride of Jacob: ‘Surely I will never forget any of their deeds!’”

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