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    -- Iska A: When Merchandise is for Business Use

Iska A: When Merchandise is for Business Use

The following Heter Iska is suitable for use when a customer buys merchandise on credit and the seller charges him for the credit. Without a Heter Iska, this is prohibited.

When the customer uses the merchandise to make a profit, he may allow the seller to share in those profits by making him an investing partner in his business. The following Heter Iska does this, but uses the regular Heter Iska concept to establish the seller's share of the profit at a specific sum of money. The seller may set this at the amount he would have charged for credit if this were permitted.

Iska Contract1

I, the undersigned, hereby acknowledge receipt of merchandise valued at $________ from ________________ (hereafter referred to as the "Investor"), to be used for business purposes. I obligate myself to utilize this merchandise in a manner which I believe will generate profits. Any profits realized or losses sustained shall be shared between the Investor and myself.

Any claim of loss must be verified through the testimony of two qualified witnesses in, and under conditions acceptable to, an Orthodox Jewish court of law. Any claim regarding the amount of profit generated by this merchandise shall be verified under solemn oath, before and under conditions acceptable to, an Orthodox Jewish court of law.

It is agreed that if I pay the Investor the sum of $________ (enter amount that is due) on or before _____________ (enter date that payment is due) as payment of both the investment and his share of the profits which are generated, then I will not be required to make any further payment nor will I be required to make an oath.

I have received one dollar from the Investor as payment for my services during the term of our partnership.2

It is agreed that any dispute which may arise in connection with this agreement shall be submitted before ________________.3 Judgment rendered by the aforesaid authority may be entered in any court having jurisdiction thereof. This agreement shall follow the guidelines of Heter Iska as explained in Sefer Bris Yehudah and has been executed in a manner which effects a legal transfer and obligation, known as kinyan sudar.4

Signature of the Recipient ________________________

Dated ______________

Signature of the Investor5 ________________________

Dated ______________


In witness whereof the above-mentioned parties have entered into this Heter Iska agreement on this _________ day of __________.

Signature of Witness ________________________

Signature of Witness ________________________


1. Hebrew versions of a Heter Iska suitable for use in this situation appear in Tam Ribbis p. 307 and Mishnas Ribbis p. 256.

2. The purchaser should pay one dollar to the trader.

3. This part of the contract is optional.

4. The supplier gives a handkerchief (or another utensil or item of clothing) to the customer. In exchange, the customer obligates himself to the terms of the Heter Iska. This is not required when the Heter Iska is signed before the delivery of the merchandise.

5. This is required only if there are legal documents which refer to this as a debt.

6. This part of the contract is optional, depending on whether the parties prefer to have witnesses attest to their agreement.

Reprinted with permission of ArtScroll/Mesorah Publications, Ltd. from "The Laws of Ribbis: The Laws of Interest and their Application to Everyday Life and Business" by Rabbi Yisroel Reisman

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