Fraudulent Pricing in Jewish Law

A seller charging more than fair market value can be forced to rebate the difference, or even to cancel the sale.

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The law was decided in accordance with the opinion of Rav, though his opinion is construed restrictively:

“If one says to another, ‘I will sell to you on condition that you have no claims of overreaching against me,’ the other nevertheless has claims of overreaching against him. This rule applies only in a sale where the buyer does not know the amount of the overcharge to which he should waive his right; and needless to say, this rule applies if one has said, ‘on condition that there is no overreaching therein,’ since there is overreaching therein.

“However, if the amount of the overcharge is known, then the aggrieved party has no claim for the difference because all stipulations made in monetary transactions are binding.

Thus, if the seller says to the buyer, ‘I know that this article which I sell you for two hundred zuz is worth one hundred only, but I sell it to you on condition that you have no claim of overreaching against me,’ then the buyer has no claim of overreaching. Similarly, if the buyer says to the seller, ‘I know this article that I buy from you for a mina is worth two hundred zuz, but I buy it on condition that you have no claim of overreaching against me,’ then the seller has no claim of overreaching.” (Maimonides, Mishneh Torah, Laws of Sale 13:3-4)

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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.