451. Selling a Promissory Note

65:15 Because one may sell promissory notes (as described in 65:14), one may make an arrangement as follows: If Reuven needs money in January, Shimon may give him a promissory note saying that he will give him $1,000 in July. Reuven reciprocates by giving Shimon a similar promissory note obligating him to pay Shimon $1,000 in July. (At this point, each holds a $1,000 note on the other, with the result being that they will break even.) Reuven, who needs money now, may sell the $1,000 note he holds on Reuven to Levi for $900. Similarly, if Shimon has a promissory obligating Yehuda that is not yet due, he may sell it to Reuven on installment payments until it is due. Reuven gives him a promissory note for this and Reuven sells Yehuda’s promissory note for whatever he can get for it. However, Reuven may not write a promissory note obligating himself to pay Shimon at a later date and then sell it to Shimon for less money sooner. This is prohibited even if carried out through an intermediary.

65:16 One may not buy grain or other produce by paying in advance for later delivery because of the likelihood that the price of the grain or produce will go up. The result would be that when the seller delivers the grain, the buyer will receive more than the agreed-upon amount as a result of paying in advance. However, if the seller currently has on hand that which he is selling, even though he agrees to deliver it later, it is permissible. This is because one is permitted to sell what he possesses at as low a price as he desires. Even if the grain is not yet ready to be sold, still requiring one or two more steps in processing, it is considered ready to be sold. However, if three more steps are still required to make it ready, one may not sell it yet.

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