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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It should be noted that the determination of one sixth as the minimum required for invoking monetary remedies applies only to the value of the item. If, however, the sale was transacted by size, weight, or number, and an error occurred, the seller must make up for his error, no matter how small. The same applies to defective merchandise:

“If one sells commodities to another by measure or by weight or by number and has made even the slightest error, the difference must always be returned, because the laws of overreaching apply only to errors in money value, while in errors in quantity the difference must be returned. Thus, if one has sold to another one hundred nuts for a dinar and it is found that there were one hundred and one or ninety-nine, the transaction is valid, but the amount of the error must be returned to the aggrieved party.... So too if one has sold [an item]... and a defect of which the purchaser was unaware is found on the purchased article, the purchaser may return the article even after the lapse of many years because this was a transaction in error....” (Maimonides, Mishneh Torah, Laws of Sale 15:1)

The monetary regulations concerning overreaching comprise numerous details. Their place, however, is to be found within the civil law. Unlike the monetary remedies which look essentially to the past, granting ex post facto remedies to the aggrieved consumer, the prohibition of overreaching protects the consumer by establishing a norm of behavior for the future. We now turn to a discussion of the prohibition.

Are Real Estate and Small Infractions Covered?

The scope of the prohibition is not identical to the scope of the monetary measures available in cases of overreaching. Whereas overreaching is not actionable in immovable property or where the amount is less than one sixth of the market value, there are those who hold that the prohibition nevertheless applies to real estate and to overreaching less than one sixth.

Buyer and Seller

The prohibition of overreaching applies to both buyer and seller. This is inferred from the relevant biblical passage, which discusses both buying and selling (see above, second paragraph).

Sale and Rental

The prohibition of overreaching applies not only to sale but to hire as well, given that the latter is regarded as a temporary sale. Maimonides writes: “If one hires utensils or livestock, the transaction is subject to the law of overreaching because hiring is equivalent to a sale for a day.” (Maimonides, Mishneh Torah, Laws of Sale 13:17)

Can You Sign Away Your Rights? Sometimes

Is the law of overreaching dispositive, in the sense that it can be being excluded by express stipulation? The Talmud reports the following difference of opinion between [the third-century Babylonian sages] Rav and Sh’muel [or: Samuel]:

“If one says to his neighbor, ‘I agree to this sale on condition that you have no claim of overreaching against me’ -- Rav said, ‘He nevertheless has a claim of overreaching against him.’ Whereas Sh’muel said, ‘He has no claim of overreaching against him.’” (Babylonian Talmud Bava Metzi‘a 51a)

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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.