Who Is At Fault For a Default?

Reneging
on an Agreement Part I

By: Rabbi
Yosef Greenwald

There are two categories of agreements which can affect when an
agreement is broken. In Bava Metzia, 49A, the Gemara discusses
two different types of contractual agreements and the ramifications of
nullifying each one.

Kinyon Kesef: When Goods Have Changed Hands

This Mishna refers to kesef which is not koneh m’taltalin. The Gemara paskens like Rav Yochanan who holds that M’doraisa, kesef is koneh, but Chazal were mevatel kinyon kesef.  Therefore,
the kinyon is not
complete until meshicha was
performed. Once the item is taken into the reshus of the lokeach, then the kinyon is valid. Before the meshicha is
complete, either party can be mevatel the kinyan.

However, the Mishna does make a qualification if someone breaks an agreement where kesef was paid or a down payment
was made on moveable m’taltalim that are
being sold. If someone breaks this kind of agreement, the Mishna says he receives
a mi shepara. The mi shepara is a klala, a curse, of “Mi Shepara m’anshei mabul v’anshei dor
hafloga hu yifrah mizeh shechozar b’diburo” 
– “He who took retribution from the people of the Mabul and the people
of the Dor Haflga,  He should take
retribution from one who goes back on his word”.

A Verbal
Agreement

A person who breaks a verbal agreement has a different level of tayna against him.

The above Gemara refers to this as “michusur amana.” In this case, a mocher and a lokeach have agreed on the sale of a
certain item.  They made up a price and
the deal was finalized, though no goods or money have changed hands. If one
party breaks this contractual agreement, there is no mi shepara, since no
actual kinyan occurred.

However, there is a degree of tayna against him, and he is considered to be m’chusar amana, he is
from those lacking in faith or as we would call it today, lacking in good
faith. Two people had a verbal agreement, and one went back on his word, so he
is lacking in good faith in honoring his word.

What Level of Tayna?

There is a fundamental difference between one who breaks a deal with a kinyon, and one who breaks a verbal
agreement.

When a kinyon is broken,
Chazal say this
is a “mi shepora.” This is
not the simple understanding that Chazal were mevatel the kinyon, rather the kinyon was broken and Chazal have a strong tayna against this.

But someone who was m’chusar
amana did not break a contract, since there was no kinyon. The only thing he broke was
his word. The tayna against
him is that he is lacking in good faith, he is missing the darga of being a baalei emunah, where
his word is trustworthy. When a person gives his word, it should be kodesh kodoshim.  There are many parshios in the Torah that point to
the kidushas hadibbur of a
person. The person who goes back on his word is considered to be m’chusar amana.

Exceptions to M’chusar amana:

Changing
Circumstances

At the end of siman 204 in Choshen Mishpot, the poskim discuss the halacha of m’chusar amana. There is
a machlokes among the Rishonim if a
person who breaks a verbal agreement to buy or sell an item is always
considered m’chusar amana.

There may be mitigating circumstances, with an instance of trei tarii. Trei tarii literally
means that there are two markets or two prices, two sheorim to this
item. 

For example, if Reuven and Shimon make an agreement where Reuven would
supply Shimon with 100 sacks of flour, at the price of $2.00 a pound.
Overnight, there was a flour shortage on the market, and the price of wheat
went up to $3.50 a pound, before the kinyon was performed. This is considered trei tarii, and if
Reuven would break his verbal agreement with Shimon at this point, there is no tayna against him.

The Shach says that
we pasken like the Rema, that in the case of trei tarii, there is
no tayna against a
person who breaks a verbal agreement, and he is not m’chusar amana. No kinyon was performed, and he did
not break his word because of lack of good faith. Rather, he broke his word
because the conditions of the agreement changed,  there was a different set of circumstances for
the deal.

Unforeseeable
Circumstances

The T’shuvas
Chasam Sofer, Choshen Mishpat, Siman 102 concurs. If there is a change
in circumstances that alters the metzios of the deal, and a person goes back on a verbal
agreement to buy or sell an item, there is no tayna of m’chusar amana.

For example, Levi is offered a job in the suburbs and he decides to
sell his house in the city. Levi made a verbal agreement to purchase a house in
the suburbs, and to sell his house in the city. 
Then, the company unexpectedly goes bankrupt and Levi’s job offer is
canceled. Now he has to go back on the verbal agreement to sell his house.  Levi is going back on his word because the
situation itself has changed, not because his word has no value. [This would
also be the case if Levi had a sudden change of financial status.]

The Piskei Chosen points
out that we cannot always use the rule of unforeseeable circumstances to remove
the tayna of m’chusar amana.

For example, if someone makes a verbal agreement to buy a car for a
certain price.  The next day, he gets an
offer to buy a car at a better price. If he were to break his verbal contract
with the first person, he is considered a m’chusar amana. 

In this case, the circumstances have not changed. When conducting business,
it is understood that you could always get a better offer. But once you make a
verbal agreement, even before the kinyon, you made a commitment. The fact that a second
person offered a better priced car is not considered to be a different set of
circumstances which would remove the tayna of m’chusar amana.

No Exceptions for Mi Shepara

However the halacha of mi shepara does not leave any room for loopholes or
exceptions.  Mi shepara applies
to a person who breaks a completed kinyon, reneging on an existing contract.
This is a more serious avla, and it
carries the weight of the klala,
a mi shepara from Chazal.  It makes
no difference if the price of the item went up or down, or if his financial or
personal circumstances changed.