By Rabbi Yair Hoffman

An irate individual was upset with El Al’s pricing on tickets to Eretz Yisroel.  Since El Al is the only game in town and the tickets are several thousand dollars more than ever before – does this constitute predatory pricing that would be actionable in a Beis Din?  When someone responded that the price is only $1140 – the individual answered that this is not a l’maaseh price (practically available)  and that actual bookings are much, much higher.   I am not sure whether this assertion is correct – but even if it is, the odds are that the irate individual would not win in a Bais Din.  Here is why.

DOES HALACHA PERMIT SUCH OVERPRICING?

The question is, does halacha permit such pricing? May stores , or an airline, just price products or tickets as high as the market will tolerate – or is there some sort of upper limit? Also, does it matter if some people just seem to accept and pay it, regardless of the price?

The Torah (VaYikra 25:14) speaks of Onaah, financial and verbal oppression. “When you make a sale to your fellow or make a purchase from the hand of your fellow, you shall not oppress one another.” Our sages (Bava Metziah 58b) state that this oppression refers to oppressive pricing. There is a further verse that also discusses oppression – which the sages state refers to verbal or psychological oppression.

It is fascinating to note that many authorities (See Minchas Chinuch 67 and Dibros Moshe BM 53:1) write that one who financially oppresses an individual is also in violation of the second verse because whenever there is financial oppression there is also a psychological oppression since being taken of financially is also a form of psychological oppression.

What is Onaah all about and does it apply in the above situation?

The general rule is that if a store charges above the market cost – this is considered financial oppression, Onaah. It makes no difference if the purchaser was aware of the over-pricing or not (Ramah 227:7 based on the Mordechai 307:7). The laws of Onaah apply to sales, purchases, and even rentals (SA 227:32). It applies to precious stones as well (SA 227:15).

THREE TYPES

There are three different types of Onaah: A] If the overpricing is within 16.67 % of the market price B] If the overpricing is exactly 16.67% above the market price C] If the overpricing is above 16.67% of the market price. There is a debate among the Rishonim whether one is fully permitted to charge within 16.67% of the market price (Sefer HaChinuch and Baal HaMaor) or whether it is prohibited to do so, but if one did it the sale remains valid (Ramban). If it is exactly 16.67% more, then the sale remains valid but the overcharge must be returned. If the overcharging is over 16.67% then the victim may reverse the validity of the sale if he so wishes (227:4).

HOW IS MARKET VALUE DETERMINED?

There are two situations in which market value is determined: (1)If there is a set market price for the item and (2) if there is a range of prices. If there is a set market price for the item in that neighborhood, some Poskim hold that there is a problem of Onaah even if it is less than 16.67% (see Aruch HaShulchan 227:7 and Machane Efraim Onaah Siman 7).

There is a debate in regard to where there is a range of prices in the community. The Beis Yoseph (CM 209) suggests that Onaah does not exist in such a situation. Most Poskim (see Bach and Shach cited in Shaivet HaLevi Vol. V #218) hold that even if there is a range of prices there is still a prohibition of Onaah. Some Poskim write that the figure is calculated by determining 16.67% above the highest price for the item within the range. Others write that one calculates 16.67% above the median price of the item. Rabbi Yaakov Yeshayahu Blau z”l in his Pischei Choshain (Vol. IV p. 296) seems to feel that this is the most authoritative view.

There is another view that the determination of the market price is based upon what the majority of vendors sell the item for (Imrei Yosher Vol. II #155). This may also be the view of the Haishiv Moshe (Responsa #102). [It is possible that the Haishiv Moshe may be in agreement with Rav Blau, however, as the language is not clear.]

THE RANGE VIEW

There is another understanding of these halachos as propounded by Rav Chaim Kohn in his book “Hilchos Mishpat” (page 294). His view, confirmed by this author in conversation with Rav Kohn, is that the true market price is what is determined by supply and demand in what the market will tolerate. Therefore, according to Rav Kohn, even if there is a minority of people that will purchase the item without looking at the price, this is still considered to be a valid market price. When this author suggested to Rav Kohn that this opinion may almost negate the concept of Onaah he responded as follows: “In your example, where three stores price an item at $20 per pound and a fourth store prices it at $30 per pound, there are still buyers. Yet there would be no buyers at $50 per pound. The $50 would be considered Onah.”

Rav Kohn’s view was not accepted by the author of the Pischei Choshen z”l, and it seems was also not accepted by Rabbonim in the area that I had spoken with.

IGNORED AREA OF HALACHA

If it is true that Rav Blau’s view is the normative halachic view, then it would seem that there would be an obligation upon the store managers to determine the upper pricing limits as to numerous items before they price their goods. This would seem to place an extraordinary strain upon the managers and owners of stores and supermarkets that sell numerous items. Yet, many Poskim that this author consulted with, are of the opinion that it should be done.

TO THE SELLER AS WELL

There are also times when there is Onaah the other way – where the buyer took advantage of the seller and purchased the item for a price 16.67% below the market price (SA 227:1). Indeed, there is an opinion where even those who assist in a sale are in violation of the prohibition of Onaah (Responsa Mishkenos Yaakov #59).

EXCEPTIONS

The laws of negating a sale or refunding the excess 16.67% do not apply to real estate.

The laws fo Onaah do not apply to barter (SA 227:20)

If a person fully understood the value of the item and agreed to the Onaah, then there is no Onaah negating the sale (SA 227:21). If they merely said that they are mochel the Onaah but did not know the true value of the item then the laws of Onaah still apply.

If the quality of the item being sold is unavailable in the market, then this is certainly an exception where the laws of Onaah do not apply.  An argument can be made that a direct ticket now to Eretz Yisroel is unavailable and thus the laws of Onaah do not apply.

When there is no existent market for an item, then Onaah does not apply (Hilchos Mishpat page 294).

The Aruch HaShulchan (227:7) writes that there may be a distinction between someone who sells a high volume of the item versus someone who only sells a small quantity of the particular item. Some Poskim further qualify things by saying that Onaah only applies when the prices are not so wide-ranged. However, if the prices are very extreme, then the laws fo Onaah do not apply at all.

It is interesting to note that the Chofetz Chaim writes in his Laws of Rechilus (Sefer Chofetz Chaim, Siman 10 and 11) that if it is clear that the laws of Onaah do apply, then anyone who is aware of it should inform the vendor.

Even if the suppositions of the irate individual are all correct – the person would lose.  Why so? There is a concept in Halacha called “KIM LI.”  This means that a person can say, “I know that the halacha is in accordance with _______.  In this case, El Al could claim that they know that the halacha is like Rav Chaim Kohn as opposed to Rav Blau.  This is because El Al is holding onto the money.  They are the Muchzak and they have the right to claim Kim Li.

The author can be reached at [email protected]