Excerpt from Teshuvah for SBM 2016

by Rabbi Aryeh Klapper

Excerpted from Rabbi Klapper’s SBM 2016 Teshuvah – stay tuned for the full teshuvah and teshuvot from the SBM Fellows!

What are we seeking to achieve as dinei mammonot (halakhic financial law) judges?

In his methodological essay Darkah Shel Torah, R. Eliyahu Bloch of the Telshe Yeshiva contends that dinei mammonot have all the general aims of secular economic regulations, but in addition contain elements with purely transcendent purposes.  Fundamentally, this suggests a utilitarian stance moderated by humble awareness that one cannot know G-d’s purposes in their full depth.

The purposes of secular economic regulation are order, justice, and equity.  Order requires predictability, and favors simplicity; people cannot follow the law if they don’t know or understand what it is.  Order can be just or unjust, equitable or inequitable.

Justice will be defined here as being treated in accordance with objective rules that whose principles are compatible with ethics.  Justice cannot exist in the absence of order.  But justice can lead to inequity, as a rule-based system sometimes cannot account for individuals and individuality, or for unusual specific circumstances.  The catch-22 is that one can lose order and justice if one seeks equity too aggressively.  

The ideal is to develop laws that yield justice and conform to equity the vast majority of the time, so that the need for equitable adjustments is low enough that it does not undermine order.

How can dinei mammonot judges accomplish this?  One key challenge is that they must pasken in ways that both shape and respond to expectations.  The ethical outcome in a financial transaction is often defined as having the parties get what they expected.  But not always!  For example, some transactions are entered into under duress, or in the expectation of bullying or fraud.  

The expectations of contemporary Jews, in both Israel and the United States, are largely shaped by contemporary Western notions of contract law rather than by formal halakhic precedent.  For example, in nonritual matters, parties generally conceive of contracts as self-enacting rather than as dependent on a subsequent giving of consideration, or on a separate maasei kinyan.1  

However, Western law has a host of doctrines (such as those of frustration and impossibility) that enable one to break a contract in light of unconsidered subsequent events.  These doctrines are regularly litigated, even though that litigation rarely succeeds.  This suggests that there is a tension between expectations and the secular law, and perhaps even between intuitive ethics and the secular law.2

Under those circumstances, it seems reasonable to say that where halakhah is not formally bound by dina demalkhuta/secular law (as it would be if the arbitration agreement explicitly required this, or if the parties signed a contract accepting this, and perhaps even if we were dealing with a case that fell within the parties’ range of expected outcomes and the secular law were clear), dinei mammonot should focus on shaping expectations rather than on conforming to them.

On that basis, I suggest that we revisit the question of halakhah’s approach to contractual obligations in light of unconsidered events.

My argument thus far has been that attempts to explain our precedents on the basis of either pure da’at (determination of actual intent) or else formal principles of construction have been unsuccessful.  On the other hand, attempts to explain them on the basis of a set of decision principles that are interlocking, less sweeping, and perhaps less formal, have produced a muddle that is unconvincing and impractical.  

Let me note briefly here three phenomena that to my mind are clear evidence of both muddle and of impracticality.

  1. The claim that a type of evidence applies only to maintain possession but never to transfer it.
  2. The claim that a rule can be applied only in cases addressed explicitly in the Talmud or in cases that are really, really clear (to the judge in a particular case).
  3. The claim that there is enough legitimate controversy about a rule that the party in possession can win the case if its possession agrees with (=asserts קים לי regarding) any of a broad and contradictory variety of understandings of that rule

One may say that in such circumstances, halakhists should simply surrender.  They can argue that there is a mitzvah to submit oneself to the halakhah as it is, however muddled and impractical, while conceding that it would be better were halakhah otherwise; when rabbinic authority is reconstituted, we will make takkanot to improve things.  

We must recognize, however, that such concessions will in practice make batei din unpopular destinations even for the most halakhically committed Jews.  I prefer, therefore, to see whether the halakhah can be reconstituted on the basis of honest interpretations of precedent, and thus the creation of new precedents.  I believe that the language of pesharah kerovah ledin used in the standard halakhic arbitration agreement allows us to be more prescriptive about the law in our decisions than is usual for halakhah.  We can decide in accordance with what the law should be, and thus over time transform ought into is.

I contend that there is an alternative to the da’at, formalist, and hodgepodge approaches presented above.  This alternative is implicit in many past precedents, and some aspects of it have been formulated by great decisores, but I suspect that it has not previously been fully articulated.  For convenience sake I will refer to it as the “ta’aninan” approach.

In a variety of cases, for example when a party is a minor orphan who inherits a claim without personal knowledge of the underlying facts, halakhah permits batei din to interpose legal claims on behalf of that party.  My suggestion is that when dealing with implicit conditions regarding unconsidered events, halakhah’s default setting is to treat all the parties as orphans.  We therefore make on their behalf all the conditions they would have made had they in fact anticipated the events.

Many of these conditions will directly conflict, of course.  We resolve conflicting claims by a game-theory method – we ask first whether party B would have walked away from the transaction rather than accept party A’s condition, and conversely, whether party A would have walked away from the transaction were party B to refuse their condition.  Whichever party would have walked away, wins.

I need to acknowledge that in reality, the parties would likely have negotiated, and agreed on a price for the condition.  This is in principle a fine tool for achieving equity and/or pesharah, and therefore should be available to batei din for those purposes.  However, no use of it is even hinted at in the precedents I have seen.  My sense is that it would generate results that are too subjective and speculative for law, along the lines of נתת דבריך לשיעורין.  

Therefore, I believe that halakhah as such must play the game artificially, with the parties having no options other than accepting a condition or refusing the transaction.

Similarly, each condition must be analyzed independently, even though in actual negotiations they would be bundled or traded for one another.

I note again that this is a mechanism for dealing with the hypothetical, not for figuring out what the parties’ actual intentions were – we are dealing with cases where there were by definition no such intentions.

I also need to mention that Professor Robert Aumann has previously theorized that at least one tanna, Rabbi Natan, thought in game theory modes.  Finally, I need to thank my friend Chava Evans, whose gift to me of Game Theory and the Law many years ago was enormously productive to my thinking.

I also need to make clear an aspect of this theory which may strike some as cheating, or as creating epicycles of its own.  Since this is fundamentally a tool of equity, like ta’aninan, the legal system is not ethically obligated to allow every possible move in the game.  Thus we may “penalize” a player for having acted unethically, or we may bar certain moves because they will have unfortunate general economic consequences for the community.  It particularly allows us to bar moves in some areas of law, such as marriage and divorce, while allowing them in others.  My contention is that the system will remain “elegant” because all allowed moves are evaluated in the same fashion.

Thus far theory.  What I need to do now is explain how the theory works to explain the primary sources on this issue, and according to which secondary sources.  Following that I will – at long last – return to the specific case at hand…

Notes:

  1. This paragraph owes much to presentation notes generously shared by Professor Chaim Saiman of Villanova Law School.
  2. This paragraph owes much to a presentation by Professor David Phillips of Northeastern University Law School at SBM 2016.  Any errors are of course my responsibility.
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