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Earnest-Money

The 1901 Jewish Encyclopedia

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Part payment of the price by the buyer of a commodity as a guaranty that he will stand by the bargain.

Wherever the payment of the whole price secured title to property, the payment of a part of the price did the same. All objects, whether movable or immovable, could be acquired by the payment of money, and part payment was sufficient to make a sale valid. The payment of a "peruṭah," the smallest coin of Palestinian currency, on account of the purchase was sufficient to bind the bargain (Ḳid. 3a; Maimonides, "Yad," Mekirah, 1:4; Shulḥan 'Aruk, Ḥoshen Mishpaṭ, 190, 2). The law regarding acquisition was restricted by the earlier rabbis, however, to immovable property. Because of certain apprehensions, they provided that movable property could be acquired only by actual possession of the object (B. M. 47b; see see ALIENATION AND ACQUISITION). Hence, where there was no delivery the payment of the purchase-money did not constitute a sale. It was, however, considered a breach of good faith if one of the contracting parties retracted after the payment of an earnest or of the whole sum, and the following curse () was pronounced upon him:

In cases of hiring and letting, the payment of an earnest was sufficient (Ḥoshen Mishpaṭ, 198, 5, Isserles' gloss; 198, 6; 199).

In the case of immovable property the payment of earnest-money constituted a sale where local custom did not require the formality of a deed of sale ("sheṭar"). The remainder of the purchase-money was then considered a loan to be paid by the buyer at a stipulated time. If the seller was urgent for the payment, and thus made it obvious that he sold the property because he was in need of money, either of the parties could retract before the payment of the last instalment; for it was evident that the seller did not agree to sell except on condition that he receive the full amount. If, however, this urgency could be explained in another way—for instance, when the property was in bad condition and the seller was afraid lest the buyer find some excuse to retract, or when the seller wished to remove to another place—then the sale was valid and neither could retract (B. M. 77b; Maimonides, c.; Ḥoshen Mishpaṭ, 190, 10-16). In cases where the earnest did not validate the sale, he who retracted had to submit to the conditions of the other party as to the manner in which the earnest-money should be refunded (ib.).

A pledge, either for part or for the whole of thepurchase-money, was not considered an earnest, and did not constitute a sale (Ḳid. 8b).

All the laws that applied to the acquisition of immovable property applied also to the acquisition of slaves (Slaves). See also Ḳinyan.