Q: I called in the local plumber to fix a burst pipe, but didn't confirm the price before he began working. How much do I owe him for the job?

A: When a price hasn't been set, the general rule is that we follow the accepted going rate, k'minhag hamedina. (Choshen Mishpat 331:2) If there is a broadly accepted standard rate, this is easy. However, often there is a range of fees, with some workers charging more and some charging less. In this case, Ketzos Hachoshen (331:3) cites the Ritva that the workman, who is claiming payment, has the weaker hand, and can only demand the lower end of the price range. However, Pischei Choshen (IV:8(11)) suggests that if this particular workman has a known fee-scale for his jobs, or if his quality of work is of a particularly high standard, we would follow that pay scale. To avoid misunderstandings and possibly cheating the worker, the Chofetz Chaim (end of Ahavas Chesed, Part I) strongly recommends getting a price-quote before beginning any work.

Q: Can I charge one price for immediate cash payment and a greater amount for credit or payment in installments?

A: This common question of two-tiered pricing relates to the issue of ribbis, interest. Payment for an item is due upon consummation of the sale, and therefore the price quoted for immediate cash payment is typically viewed as the "true price." Therefore, if the vendor charges more for credit or payment in installments, he is considered as charging interest for the delay in payment. According to most authorities, a heter iska would be required to allow such a pricing system. Otherwise, one is only allowed to pay the lower, immediate cash price. [There are some authorities, though, who maintain that if the credit price clearly reflects the true market price, and the cash price is a discount from the true price, it is allowed. (Chochmas Adam 139:5)] In any case, it is permissible to quote a single price, allowing for credit or payment in installments. 

Q: Can I offer net-30 terms with a 2% discount for prompt payment?

A: This arrangement seems parallel to the two-tier pricing for cash/credit discussed in our last newsletter, since there is a lower price for prompt payment, and a higher price for payment in 30 days. Thus, according to most authorities, this payment arrangement is considered a form of ribbis, interest, and allowed only by means of a heter iska. [According to the Chochmas Adam, however, this arrangement is permissible, since the net-30 price reflects the true market price.] It is also permissible to provide the 2% discount in the following manner: The sale should be concluded and a single price set with net-30 terms alone. After the goods are already handed over, or the transaction is consummated with a kinyan, then the invoice may be sent allowing a 2% discount for prompt payment. (Y.D. 173:3)

Q: If the vendor and customer were in dispute over a price, and the goods were delivered or the service provided before settling, how much is owed?

A: If the vendor and customer were still disputing the price, it is considered as if the sale or service was done with no price-quote at all. In this case, we follow the minhag hamedina – the going rate. It the rate varies, generally the vendor has the weaker hand.

However, if the customer at first rejected the sale because the price was too high, or the vendor rejected it because the offer was too low, and later they got together and carried through the sale anyway without an explicit agreement, whoever took the initiative to carry through is considered as acquiescing to the other party. Thus, if the customer called the vendor and told him to deliver the goods, he must pay the higher price demanded. If the vendor called the customer to say that he is sending the goods, he is entitled only to the lower price offered. (C.M. 221:1 and Pischei Choshen Sechirus 8:5)

Q: Can a store manager, salesperson or cashier make a "special deal" with the customer below the price set by the store owner?

A: The store manager, salesperson and cashier are all agents of the store owner and are required to act in his best interest. In general, an agent is required to follow the directions of his sender, and can take initiative only to the degree authorized by him. Thus, the store manager would typically be authorized to make even substantial "special deals" if he evaluated it to be in the best interest of the store; a salesperson would typically have some flexibility in order to secure the sale; the cashier would typically not be authorized to adjust the price other than for issues of small change. The specific application of this principle varies from store to store and from case to case. If an agent irresponsibly sold something below the price set by the owner, he is accountable for the difference. (See Shach 96:9 and C.M. 185:1)

Q: Can the buyer or seller renege on an agreed price before delivery?

A: There are three stages in buying, each of which has a different halacha.

1. If there was only a verbal or informal written agreement, a person has a moral obligation to uphold his word, but it does not carry legal consequence. If is person recants his agreement, he is called mechusar amana, lacking trustworthiness. (Choshen Mishpat 204:7, 11)

2. If the buyer paid for the purchase, but did not yet do an act of acquisition (kinyan), the parties have legal ability to recant, but are subject to a curse of Beit Din, mi shepara: "The One who punished the generation of the Flood and the generation of Dispersion will punish one who does not uphold his word." (204:1, 4)

3. If the buyer already made an act of acquisition (kinyan), even if he did not pay yet, the transaction is legally completed and the parties cannot renege any more. (189:1)

We will discuss some common acts of kinyan in a later issue.

Q: You set a price with your supplier based on the expected price from your customer. If your customer lowers his price, may you renege on the confirmed price with your supplier or cancel the order and buy the merchandise from him again at a lower price?

A: If the order from the supplier was completed with a kinyan, you cannot renege on the price or cancel the order, unless there was a clear statement that the agreed price was based on the expected price from the customer (C.M. 207:3 and Pischei Teshuva #5). A properly signed order form might be considered a kinyan if the common commercial practice is to consider such an order as final (201:1).

If there was no kinyan, the Rama (204:11) cites two opinions whether there is a moral obligation to uphold a commitment when there was a change in market circumstances meanwhile. The Rama holds that there is, but a number of Achronim question this ruling (Shach 204:8).

In any case, reneging on the price and cancelling the order and re-buying would seem to have the same rule.