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From Our Hotline

Sales and Stipulations

I am a wholesaler and recently sold merchandise to a broker who sells to retailers. I specified in our contract that he may not sell the goods to a certain competitor of mine. He sold some goods to my competitor anyway, violating our contract. I demanded that he cancel his deal with this buyer and return all available merchandise to me. His defense was that he was finding it difficult to sell the goods and that this sale was his last option. He feels that the sale will not harm me and, therefore, the stipulation doesn’t apply.
 
Q: Was he allowed to make this sale?
 
A: It seems your stipulation falls into the category of conditional transactions, and since the broker violated this specification, you may retroactively cancel the deal. However, conditional transactions are subject to strict halachic guidelines known as the “Conditions of the Children of Gad and Reuven”: the pattern established by Moshe Rabbeinu as he made a conditional agreement with the children of Gad and Reuven to permit them to take possession of Transjordan (see Bamidbar 32). One basic feature requires spelling out explicitly that a deal is valid only if all conditions are met and cancelled if the conditions are not met (‘tnai koful’). If both possibilities are not spelled out, any stipulations are rendered irrelevant and the sale still stands, despite the fact that the conditions were not fulfilled. However, Nesivos HaMishpat (207:1, 241:11) writes that conditions to transactions that involve movable objects do not have to be made in accordance with the guidelines of the Children of Gad and Reuven. Mishpat Shalom (C. M. 207:1) explains that this practice was adopted to ease the flow of commerce. Otherwise, people might hesitate to engage in trade out of concern that a deal might be validated even if the conditions were not met. According to this, it would seem that your claim is valid, since your question involves movable objects and a simple stipulation is binding.
 
The truth is, though, that in your case, the broker is not bound by your stipulation for a completely different reason. Nesivos HaMishpat (in his work on Hilchos Pesach, Mikor Chaim O.C. 248:6) explains that a condition must be clearly worded as a condition to the transaction (e.g. “If this... then that”) and not as an instruction to do something that is not conditional to the transaction. Therefore, if Reuven gives Shimon a gift and instructs him to return it, the gift is not cancelled even if Shimon fails to return it, since Reuven did not stipulate the return of the object as a condition to his gift (but see Mishpat Shalom 207:1, addressing a possible contradiction from C.M. 253:12). So in your case, although it was absolutely improper for him to violate your agreement, since this clause was not worded as a stipulation, the transaction is not cancelled because the instruction was not followed. His breach does not grant you a legal claim to the goods that are in his possession. It is regrettable that this contract - and, unfortunately, many others - was not drafted in a halachically correct way.