Skip to main content

A Lack of Good Faith

**********************************************************************

In loving memory of Channa Schreiber (Channa Rivka bat Yosef v' Yocheved) z"l,
with wishes for consolation and comfort to her dear children
Yossi and Mona, Yitzchak and Carmit, and their families,
along with all who mourn for Tzion and Yerushalayim.

**********************************************************************

*

  

            The issue of "lack of good faith" addresses the degree to which a person's commitment is legally binding. For example, if a person obligated himself to buy or sell a particular object, is he permitted to change his mind and renege on his commitment?

 

            The analysis of this issue needs to address three different degrees of commitment:

 

1) Commitment in one's heart – when a person merely decides between him and himself on doing something.  This is the least binding commitment.

 

2) A verbal agreement – a verbal agreement was reached between two parties.

 

3) An act of transaction was performed that is not a valid mode of acquisition (kinyan). Opinions differ on the question whether monetary transfer is a valid mode of acquisition by Torah law, but all agree that by Rabbinic enactment payment cannot effect a transaction. Accordingly, a person who has already paid for the merchandise he wishes to acquire has not yet performed a valid mode of acquisition.

 

            The first category is discussed in Bava Batra 88a:

             

Our Rabbis taught: A person, [who comes] to buy herbs in the market, and picks out and puts down, even all day long, does not acquire possession [of the herb] nor does he become liable to tithe it. [If] he has made up his mind to buy it, he acquires possession and becomes liable to tithe it… Does one, then, acquire possession and become liable to give tithe because he has made up his mind to buy? Rav Hoshaya replied: We deal here with [the case of] a God-fearing man like Rav Safra, who applied to himself, "And speaks truth in his heart."

 

            This principle, even if its binding application is limited to unique individuals, highlights the caution that is demanded of a person even in his unspoken decisions.

 

            The notion of "lack of good faith" appears in Bava Metzia 49a:

  

Rav Kahana was given money [in advance payment] for flax. Subsequently [prior to the delivery] the cost of flax rose, so he came before Rav, who said to him: Deliver [the goods] to the value of the money you received; but as for the rest [any additional flax], it is a mere verbal transaction, and a verbal transaction does not involve “a lack of good faith.” For it has been stated regarding [retracting from] a verbal [agreement to undertake a transaction]: Rav said: It involves no lack of good faith; Rabbi Yochanan said: It does involve a lack of good faith.

 

            The Amoraim Rav and Rabbi Yochanan disagree whether one of the parties can retract in a case where a verbal agreement was reached.

 

            In the case of monetary payment, the third level, all agree that the party who reneges is defined as lacking good faith, warranting the severe reprimand of the curse of "He who punished" ("He who punished the generation of the flood and the generation of the dispersion will punish him who does not stand by his word"). "He who punished" is a declaration made in the court in derogation of the person. It seems that this applies only in a case where a person paid or received money, because then there is an exploitation of the Rabbinic enactment, for by Torah law the transaction has already taken effect.

 

            The Shulchan Arukh (Choshen Mishpat 204:1) codifies this principle as follows:

 

If a person paid money, but did not draw the movable goods into his possession – even though the goods have not been acquired, as has been explained, anyone who retracts, whether the buyer or the seller – has acted in a manner not befitting a Jew, and is subject to the curse of "He who punished."

 

            Later in that same section, in paragraph 7, the Shulchan Arukh writes:

 

Anyone who does business [having committed] with mere words – it is fitting that he stand by his word… Anyone who retracts, whether the buyer or the seller, even though he is not subject to the "He who punished" curse, is counted among those who lack good faith, and the spirit of the Sages is not pleased with him.

 

            While the expression, "and the spirit of the Sages is not pleased with him," is itself quite severe, it should be noted that some of the Rishonim use even more severe expressions regarding such people.

 

            In any event, the Shulchan Arukh rules in accordance with Rabbi Yochanan in his disagreement with Rav, that retracting from a verbal agreement involves a lack of good faith.

 

            There is a dispute in the Rishonim between the Ba'al Ha-ma'or and the Ran, the Ramban, and others, regarding a situation of changing prices. The underlying issue behind this dispute is as follows: is the obligation to stand by one's word an absolute obligation, in effect in all cases, or is the obligation only in force when the party has no reason to retract? As indicated, the two approaches to this question will lead to differing ruling regarding a case where there is a reasonable justification for retracting, namely, where the price has changed. Since, by retracting, one party is able to earn a greater profit, is he permitted to retract?

 

            The Ba'al Ha-ma'or rules that in such a case, he is indeed permitted to retract. Most of the Rishonim rule that even in such a case, he may not retract.

 

            The Rema in Shulchan Arukh 204:11 rules as follows:

 

This [injunction against retraction] applies when there is the price is the same, but when the price has fluctuated, it is not a case of lacking good faith… And some say that even when the price has fluctuated, a person is forbidden to renege, and if he reneged, he is counted among those who lack good faith. And this seems to be correct.

 

            The Shakh cites the view of the Bach, who expressed doubt about this law:

 

And the Bach was in doubt about the manner, since the Yerushalmi explicitly teaches in accordance with the Ba'al Ha-ma'or and the Rosh.

 

            The Sema notes that the Rambam and the Shulchan Arukh did not rule in accordance with the Ran and the Ramban, and rules that in such a case one is permitted to retract.

 

            The Chatam Sofer in his responsa (no. 102) was asked about the following case: A person agreed to sell a certain article to another person, because he wished to buy a different article with the proceeds of the first sale, and in the meantime he received the desired article by inheritance. Is he now permitted to retract?

 

            The Chatam Sofer begins by noting that such a situation parallels the case of price fluctuation. His understanding is that the notion there is not limited to a case where the prices changed, but refers to a case of sudden change, as in our case. And indeed the Chatam Sofer inclines toward leniency and permits him to retract.

 

            The Minchat Yitzchak cites another case that does not involve a sale. A person to whom a son was born asked a certain distinguished man to circumcise the baby. The would-be circumciser answered that he was unable to do so, and so the father went and asked somebody else. The next day the first person informed the father that in fact he can come and perform the circumcision. Is the father permitted to take back the request from the second person whom he had asked to do the job? The Minchat Yitzchak permits him to retract, because we are dealing with a significant change from the father's perspective. He also adds that the Chatam Sofer was only lenient in the case of a significant change, but not in the case of a minor change.

 

            The Iggerot Moshe (Choshen Mishpat I:58) addresses a different case of breach of faith. He was asked regarding a group of workers who decided to go out on strike, and one member of the group wished to retract, thereby causing damage to the other workers. This is a significant practical question, for cases similar to this one arise all the time.

 

            The Iggerot Moshe relates to the disagreement between the Rishonim mentioned above. He explains that the question is whether the person's obligation is to his fellow or to himself. If the obligation is toward himself, i.e., that a person must be an upstanding fellow (along the lines of the Ba’al Ha-ma’or), then if the price changed, he may still be regarded as upstanding, even if he retracts, because he had not anticipated such a situation. But if the obligation is to the other person (along the lines of the Ramban), what this means is that once they have reached an agreement, the other person already has certain rights in the object, and so even if the object went up in value, it is the other person who should enjoy the profit, and therefore even in a case of changing prices, one is forbidden to retract.

 

            As for the question presented to him, the Iggerot Moshe rules that the person is forbidden to renege on his agreement to participate in the strike.

 

            It should be noted that certain cases are unequivocally defined as cases of damage. Take, for example, a case where an employer hired a worker for a day's work, agreeing on the wage, and when the worker arrived, the employer told the worker that his services were not needed, causing the worker to lose a day's pay. Such a case is defined as indirect damage for which a person is nevertheless liable (garmi), and the employer must compensate the worker for his loss.

 

            This issue of breach of good faith has many ramifications in our lives:

 

            If a person put in a bid for a certain product, may he retract? At first glance, this appears to be a case of breach of good faith, for the person had proposed a certain price that he was willing to pay. Here, however, there are two points that must be considered: First of all, the other party did not accept the offer, so there was never any agreement to go ahead with the deal. Second, in most such cases there is a stipulation stating that if the person retracts, he is liable to pay a certain penalty. The question is how should this be understood: Does this mean that the other party is willing to accept a retraction, because he profits through the penalty? Or is the penalty meant to deter people from acting in this manner, in which case the person may be forbidden to retract.

 

            In ordinary cases, this type of retraction is not viewed as critical, but there are cases where it does become problematic. For example, if a person registered in advance at an educational institution, and then just before the academic year a place opened up at his preferred institution – may he retract? Even if the down payment paid at the time of registration is non-refundable, the question remains whether or not he may retract, for he causes the institution damage – the loss of a year's tuition, assuming that it will not be able to find another student to fill his spot.

 

            Similarly, if a person was offered a job, and he agreed to take it, but in fact he is waiting to hear about another job, and only if he doesn't get the other, preferred position will he actually go to work in the first place. Here too he might be causing the potential employer damage, for he assumes that he has the worker that he needs.

 

What does one do? What is the solution?

 

First of all, it is preferable to clarify from the outset with the other party all of one's doubts and all of the possibilities, and agree on a certain sum of money or the like to be paid in the event that the agreement is not honored for whatever reason.

 

In any event, a person must be careful not to obligate himself to anything uncertain in advance, but rather to commit only when the parties arrive at a definitive conclusion, at which point they can sign on a contract or finalize the agreement in some other way after which there is no retraction, in order to avoid being considered as a person who lacks good faith.

 

(Translated by David Strauss)


* Rav Levi did not review this version of the shiur.

This website is constantly being improved. We would appreciate hearing from you. Questions and comments on the classes are welcome, as is help in tagging, categorizing, and creating brief summaries of the classes. Thank you for being part of the Torat Har Etzion community!