Rambam - 1 Chapter a Day

Who agreed to give the second person a share in the profits because of his professional or business skills.

In contrast to the investment agreement to be discussed, neither partner must be paid a wage. Since they both invest money and work, there is no question of interest involved.

The point of the halachic construct discussed in this chapter - a heter iska - is to enable a person to profit from a business investment with a fellow Jew without transgressing the prohibition against taking interest. For the investor is giving money and receiving more money in return. To prevent that from being considered interest - or even “the shade of interest” - our Sages developed the convention that the Rambam describes.

The Kessef Mishneh notes that in the following halachah, the Rambam adds the phrase “and they made no stipulations between themselves.” Implied is that our Sages ordained these guidelines only when the partners did not come to an agreement beforehand. If they established a partnership arrangement regarding the division of the profits and the losses, it should be followed as long as there is no question of interest involved.

As is the case with regard to any loan. If a profit is made, the profit from this half of the investment may be kept by the administrator - and if a loss is suffered, the administrator must pay for this portion of the loss.

I.e., the administrator is not held liable.

I.e., his liabilities are those of an unpaid watchman. The Ra’avad objects to this ruling, asking: Why – since he receives a wage for his services – is he not considered a paid watchman, who is liable under such circumstances?
In his Kessef Mishneh, Rav Yosef Karo resolves the question posed by the Ra’avad, explaining that the administrator is not receiving a wage for guarding the object, but for doing business with the money of the partnership. Nevertheless, in his Shulchan Aruch (Yoreh De’ah 177:5), he quotes the Ra’avad’s view.

A Rabbinic prohibition enacted as a safeguard for the Scriptural prohibition. According to Scriptural Law, interest is prohibited only when at the time of the loan, a specific amount or percentage was stipulated to be paid as interest. Our Rabbis, however, extended the extent of this prohibition to include other situations where a person received profit. See Hilchot Malveh V’Loveh, Chapter 6.

Since he is being paid a wage for his services, he does not appear to be taking care of the portion entrusted to him in return for the loan of the second portion.

In his Commentary on the Mishnah (Bechorot 4:6), the Rambam explains the meaning of this term:
I have heard many interpretations, but none of them is satisfactory... This refers to a person who is capable and expert in his profession and thus worthy of earning a significant amount. [He] is not paid the sum given to such a worker, but rather that paid to an ordinary worker from this profession... This is the intent of the phrase “as a worker of the trade in which he is employed.’’
“As an unemployed worker of the trade in which he is employed” implies [a further reduction], dependent on the amount of toil or rest involved in performing that profession. For example, there are certain tasks that require strenuous labor - e.g., iron workers or hewers of marble. If a worker in such a profession were given the chance of performing this labor or resting, he would prefer to rest, even though he would receive much less.
Thus, according to the Rambam’s conception, the administrator must make two waivers. He must forfeit the additional money that he would earn if he is more skillful than the ordinary person in his profession. He must also consider it as if he is resting and give up the amount of his wage that he would sacrifice in order to rest.
The Kessef Mishneh quotes Rashi (Bava Metzia 68a), who interprets this as referring to the wage at which a professional of his degree of expertise would be willing to accept work that is easier and not as demanding as the profession in which he is ordinarily employed. He also cites the view of Tosafot and the Tur (Yoreh De’ah 177), which interprets the term as referring to the wage that would be demanded by a worker who is unemployed and would thus be willing to accept a lower wage than usual.
The Shulchan Aruch (Yoreh De’ah) quotes the Rambam’s wording without explaining the term. The Siftei Cohen 177:5 and the Turei Zahav 177:3 cite various different views.

The wording used by the Rambam implies even an occupation that is minimal in time and profit.

I.e., a minor sum.

Since he is not solely involved with caring for the investment, we need not consider the wage he receives for his efforts comparable to what a person would receive for a day’s work.

This extra amount is considered in place of his wage.

If, however, he does not have another occupation, he must be required to bear a lesser share of the loss, as stated in the following halachah.

The Kessef Mishneh interprets this as meaning another investment as the same type he is administering for the investor – in which instance, while he is caring for his own investment, he will also be caring for that of the investor. If, however, he has another profession that is not connected to the investment, it is of no consequence, and the investor must pay him a wage.

The Turei Zahav (Yoreh De’ah 177:7) explains that this refers to an instance when the partners ask how to make the division in the proper manner. If, however, the division was already made and then the administrator asks for his wage, he need not be paid anything more. Since the question does not involve interest as forbidden by Scriptural Law, the court is not empowered to act on the administrator’s behalf.

I.e., it is preferable for the investor and the administrator to come to an agreement between themselves with regard to the division of the profits and losses, that will al o acknowledge a portion due the administrator as his wage. If, however, this has not been done, our Sages set up these ground-rules so that there would be no que lion of interest involved.

One half plus one sixth equals two thirds.

The Rambam’s decision is based on the principle that the administrator must be given an advantage over the investor, both in the event of a profit and in the event of a loss.
The Tur and the Ra’avad differ with this ruling and maintain that the administrator must bear half the loss. They maintain that it is sufficient for him to receive only one advantage over the investor. (See also the following halachah.) The Shulchan Aruch (Yoreh De’ah 177:4) quotes the Rambam’s ruling. The Siftei Cohen 177:14, however, questions his decision, maintaining that the majority of the authorities follow the Ra’avad and the Tur.

One half minus one sixth equals one third.

This opinion can be found in the works of the Baal Halachot Gedolot, one of the early halachic texts published after the Talmud. It parallels the opinion of the Ra’avad mentioned in the previous halachah: that the administrator may be given only one advantage over the investor.
Significantly, from the Rambam’s Commentary on the Mishnah (Bava Metzia 5:4), it appears that the Rambam originally subscribed to this opinion himself.

If, however, a stipulation to this effect is made it is binding. As long as the administrator is given some advantage over the investor, there is no question of interest. The Rambam, however, maintains that unless a stipulation is made, the profits and losses should be divided according to the principles stated in the previous halachah.

This is obviously speaking about a situation where the work performed by the investor is not a major factor, and the profit comes primarily from the initial investment.

Since he is being granted an advantage for performing the work, the work he performs on behalf of the investment is not considered interest given in return for the portion he receives as a loan.

This refers to Rabbenu Yitzchak Alfasi and the Ri Migash.

Unlike the Rambam, who makes a distinction between whether or not a stipulation was made, these authorities maintain that what is of fundamental importance is whether or not the administrator has another occupation. If he has another occupation, as long as he is given a small advantage over the investor, it is acceptable. If he does not have another occupation, he must be given a sizable recompense for his work.

In the previous halachah.

The Rambam does not accept the distinction mentioned above, maintaining that as long as the administrator is granted a certain benefit, there is no question of interest, even according to Rabbinic Law. Therefore, if an explicit stipulation is made between the partners, that stipulation is allowed to stand. Nevertheless, if they do not make a stipulation, the administrator is given a more favorable settlement, as stated in Halachah 3.

I.e., a stipulation was made only in the case of profit, and not in the event of a loss.

This twelfth - one third of one fourth - is granted to the administrator as his wage, so that there is no question of interest involved. The Rambam arrives at this figure because, according to the principles mentioned in Halachah 3, the administrator should be granted one third of the share of the investor as his wage.

The fourth he was supposed to receive, plus a second fourth (one third of the three fourths received by the investor).

The investor is given six sevenths, and the administrator one third of that, two sevenths, as his wage. Thus, when there is a loss of seven dinarim, his wage should be two dinarim. He must then pay one dinar as his share in the loss, leaving him with a gain of one dinar.

Since there is a loss of fourteen, the administrator’s share of the loss is two dinarim, and the investor’s share of the loss is twelve. The administrator should be give one third of twelve, four, as wages. And four minus two is two.

By associating the share of the loss that the administrator must bear with the portion that he himself would receive - rather than the portion that the investor would receive - the Rambam ensures that in the event of a loss, the administrator will always be forced to bear a share of the loss, although that share will be smaller than the share of the profit he would receive (Kessef Mishneh).

In this regard, he accepts the approach suggested by his teachers.

One fourth is three twelfths. Two thirds of three twelfths is one sixth.

His fourth plus one third of the three fourths to be received by the investor.

The approach of the Rambam’s teachers is accepted by the Shulchan Aruch (Yoreh De’ah 177:27-28).