Weiss' Widgets were capturing the market as the most highly acclaimed widgets. When they announced a sealed bidding for retail rights of their newest widget, the offers were highly competitive.
"I want that contract!" Reuven Reiss directed his bidding team from Reiss Retail Distributors. "Those widgets are the wave of the future!"
Indeed, Reiss Retail was awarded the rights. A contract was drawn up: "Weiss' Widgets agrees to sell Reiss Retail Distributors 100,000 widgets at $23@ with a 20% down payment."
The 100,000 widgets were unpacked from the warehouse, loaded in freight cars, and sent on rail.
While in transit, the eccentric Mr. Weiss suddenly decided that he wanted to retail the widgets directly. "Weiss' Widgets belong with Weisses not Reisses!" he insisted.
"But we already signed the contract, received a down payment and shipped the lot," protested his exasperated lawyer!
"I don't care," roared Mr. Weiss. "I'll prove to Reiss that the contract is not binding according to halacha, nor is the down payment!"
Weiss' lawyer immediately sent a notice by fax, email and courier to Reiss Retail that they were retracting the sale and would return the down payment.
Reuven Reiss was dumbfounded when he received the message. "I've already begun a whole ad campaign," he exclaimed: "Ride the Widget Wave! Reiss retails Weiss!"
Reiss immediately responded to Weiss: "You already signed a binding contract to sell us the widgets. You can't back out."
"Check out the halacha," Weiss wrote back tersely.
"I'm not a halacha expert," answered Reiss. "But I know without question that it is morally reprehensible to retract from such an agreement, even if legally possible. Such an action indicates a lack of trustworthiness and is unethical, wicked, and deserving of a curse." (C.M. 204:1,7)
However, Weiss remained adamant. "We are not interested with ethics and moral considerations. Unless the agreement is legally binding in halacha, we intend to retract the sale and retail the widgets ourselves!"
Reiss's lawyer sent a formal legal notification: "Widgets were sold under contract and a cash deposit was paid by my client. A legally binding arrangement was made and we intend to take legal action if it is not honored."
Weiss' lawyer responded: "For a transaction to be binding in halacha, it must be accompanied by an appropriate kinyan, a formal act of acquisition. Neither a contract nor a cash payment serves as a kinyan to finalize a sale for moveable items such as widgets. As such, we are able to retract the sale according to halacha."
Reiss was infuriated, but intrigued, by this response. He had learned in Maseches Kiddushin about the need for an appropriate kinyan for each item.
"I know that a contract and cash serve as kinyan for real estate, not for moveable items," he mused. "Could it be that the sale is not halachically binding?"
Reiss asked Rabbi Tzedek to summon Wiess to a din Torah. The two appeared before the Beis Din.
"What do you claim?" asked Rabbi Tzedek of Reuven Reiss.
"We demand that Weiss' Widgets honor its contract," he answered, "and sell us the widgets!"
"And what do you say?" Rabbi Tzedek turned to Mr. Weiss.
"We explained to Reiss," responded Mr. Weiss, "that neither a document nor a cash payment serves as a binding kinyan for moveable items."
Rabbi Tzedek and his Beis Din conferred and ruled: "The contract is binding on the basis of the concepts of situmta and hischayvus."
"What's that?!" asked Weiss, taken aback.
Rabbi Tzedek explained: "Indeed, each transaction must be accompanied with an appropriate kinyan. However, the Gemara in Maseches Bava Metzia (74a) introduces a new form of kinyan called situmta.
Situmta was a practice of wine merchants to mark the barrels in their warehouse that were already ordered. If the practice of the merchants is to consider this mark as finalizing the sale, it is validated by halacha, as well. The Shulchan Aruch expands this concept to any common commercial practice. Thus, any act that merchants do to express completion of the transaction, even if not enumerated in halacha, is binding. (C.M. 201:1-2)
"Amongst the most common examples of situmta are contracts, since merchants consider this agreement binding. Other possible examples are handshakes, down payments, and 'mazal u'bracha' in the diamond trade. If the local law considers the contracts legally binding, it could also be granted halachic validity on the basis of dina d'malchusa, the law of the land. (Pischei Teshuva 201:2)
"Furthermore, the Nesivos (203:7) writes that a person can obligate himself to sell something, the same way he can obligate and accept upon himself a debt (hischayvus). The language, 'agree to sell,' can be understood nowadays as accepting an obligation to do so.
"Therefore, the widgets contract is absolutely binding also in halacha, and you have no legal ability to retract."