Question: I plan to open a gemach that will rent out clothing and costume jewelry for a nominal fee. I want each renter to sign a contract accepting full responsibility for the rented item, regardless of what happens to it. How should I phrase that clause? Can I obligate people to replace the damaged item with a new one, even though they rented a used one?
Answer: This response will focus on what is permitted and what is not; future articles will discuss the correct wording to enforce these conditions.
There is a distinction between renting clothing and jewelry. When issuing a loan (halva’ah), whether money or objects, the lender may not receive in return anything more than what he loaned. Any additional benefit violates the prohibition of ribbis. In contradistinction, when leasing an object, the owner is permitted to receive benefit in addition to the return of his object, i.e., the rental fee.
The distinction between a loan and a lease is that one who takes a loan returns other monies, whereas someone who leases something is expected to return the leased item and may not replace it with another. However, even when renting an item, if the renter is responsible for the object even for an oness (unanticipated mishap), it is categorized as a loan. Since responsibility rests solely on the renter, it is similar to a borrower who is always responsible to repay the loan. Paying rent is allowed only when the owner suffers the loss of wear and tear of the rented object (and any devaluation) so that the rental fee is considered payment for the depreciation.
In your situation, clothing depreciates and thus it is considered a rental rather than a loan, even if the client accepts responsibility for oness.
Since the allowance to collect rent is in lieu of reimbursement for the depreciation loss, the renter may accept liability only for the value of the object at the time of the oness. He may not commit to repay the value of the object when he rented it if it lost value between the initial rental and the oness. (Rema, Y.D. 176:3; Bris Yehudah 29: requires this to be stipulated from the outset.)
Some maintain that one who rents a used object may commit to replace the object with a new one if the rented one is damaged. Such a commitment is not considered payment for depreciation and that transforms the transaction into a loan. Since it does not reflect the value of the rented item he received, it is considered a penalty, which is permitted (Toras Ribbis 13:; Nesivos Shalom 176:4:12).
The above applies to objects that depreciate. Jewelry does not noticeably depreciate and thus one cannot assert that the rent is intended to cover the owner’s loss from depreciation. Consequently, if the renter is liable for an oness, the transaction is categorized as a loan, and if the owner collects any more than the return of the jewelry, the prohibition of ribbis was violated. A solution that would allow the gemach to charge when an oness occurs is to stipulate that the renter will not be believed to claim that an oness occurred unless confirmed by witnesses (see Shach, Y.D. 177:20).
Items that depreciate: The renter can be liable for oness provided that the owner suffers the loss of any devaluation. Some are lenient and permit the renter to replace a damaged used item with a new one.
Items that do not depreciate: The owner must accept responsibility for any loss, but he may limit the renter’s credibility to claim that an oness occurred.
Money Matters: Guarantor Basics
Based on the writings of Rav Chaim Kohn, shlita
Question: Someone asked me to serve as a guarantor on his loan. How does halachah view a guarantor?
A guarantor carries halachic liability. Serving as a guarantor for someone in need of a loan is included in the mitzvos of gemilus chasadim and v’hechezakta bo. But one should be careful not to enter a guarantor liability that he will not be able to cover. This is especially true for a talmid chacham (Rambam, Hil. Matnos Aniyim 10:7; Hil. Dei’os 5:13).
When a guarantor commits at the time of the loan, there is no need for an act of kinyan. The lender’s reliance on him to grant the loan is sufficient basis to obligate the guarantor. If the guarantor was added later, a kinyan or formal document is needed (C.M. 129:1–2).
A standard guarantor is liable only if the lender cannot collect from the borrower. There are other kinds of guarantors — arev kablan and arev shluf dutz—that accept responsibility even without having to sue the borrower first, which will be addressed later, be’H. (C.M. 129:15; Y.D. 170:1).
This article is intended for learning purposes and not to be relied upon halacha l’maaseh. There are also issues of dina d’malchusa to consider in actual cases.
Rabbi Meir Orlian is a faculty member of the Business Halacha Institute, which is headed by HaRav Chaim Kohn, shlita, a noted dayan. For questions regarding business halacha issues, or to bring a BHI lecturer to your business or shul, please call the confidential hotline at 877-845-8455 or e‑mail firstname.lastname@example.org. To receive BHI’s free newsletter, Business Weekly, send an e‑mail to email@example.com.