Favors For Loans And Loans For Favors

Question

Yerucham
is an expert carpenter with a heart of gold. He has done many favours for
his neighbour, Dov. He is now in urgent need of a loan and turns to Dov
with a request to lend him $5000. Dov is hesitant – and Yerucham is
desperate! Yerucham decides to remind Dov of the many valuable favours he
has done for him over the years. Dov can no longer refuse. However, as he
hands Yerucham the money he says, “But make sure you give me a
substantial discount when I order new bookshelves!” (a) Is there any
problem in Yerucham reminding Dov of past favours in order to receive a
loan? (b) May Dov demand future favours in return for granting a loan?


Answer

Our first question is whether Yerucham’s past favours
for Dov retroactively become ribbis mukdemes (pre-loan interest). Do we
now view them as prepayment for a future loan? The Radvaz writes in his
responsa (4:233) that the motivation to grant a loan to any particular
individual is generally the lender’s relationship towards him. He thinks about
the favours or friendship that this person has shown him in the past. There is
no problem of direct or indirect ribbis involved in this attitude. Rav
Blau (Bris Yehudah, Chapter 5, Note 9) discusses whether this applies
even if the lender specifies that this is the reason for granting the loan when
he hands over the money. Perhaps the Radvaz only permits such motivation
if it remains in his mind, but not if it is expressed verbally? He brings a
proof from the laws of ribbis mukdemes. It is forbidden to specify that
you are giving a gift with the expectation of later receiving a loan. However,
reminding the recipient about the past gift when requesting the loan is in
order. Similarly, even specific mention of past favours does not infringe the
laws of ribbis in any way. (We are not discussing whether such pressure
is morally correct.)

However, to ask for future favours in return for a loan
is definitely forbidden. The Shulchan Oruch (Yoreh Deah, 160:23)
writes that if the lender is a craftsman and he stipulates that the borrower
must send all future work that he needs to him, this is forbidden. According to
one opinion (tovas hano’oh mommon), this even violates the Torah
prohibition of fixing interest at the time of lending (Remo). The Shach
(Note 37) adds that if the borrower is a craftsman and the lender stipulates
that he expects the borrower to work for him in future at a discount, all
are agreed that this violates the Torah prohibition of ribbis ketzutzah
(fixing interest at the time of lending). He quotes the responsa of the Mabit
(Vol. 1, No.23), who discusses the case of a tailor who lent money for a period
of time. When the time arrived for repayment of the loan, the borrower asked for
an extension of the loan. The tailor made such an extension conditional on the
borrower having his clothes repaired by the lender at a higher price than other
clients. The Mabit ruled that this was forbidden and constituted ribbis
ketzutzah
, since an undertaking had been made to pay an unusually high
price. It makes no difference whether the borrower has to pay more for the
services of the lender or the lender pays less for services rendered by the
borrower. In both instances, the borrower has contracted to sustain a financial
loss in return for the loan. This financial loss is undoubtedly a form of
interest, fixed at the time of lending. Accordingly, if such a contractual
discount or overpayment had been given, Beis Din would order its return.

In conclusion, Dov is within
his rights to refuse to lend Yerucham the requested sum, but he certainly may
not ask for any favour in return. However, Yerucham may remind him of past
favours in order to receive the loan.