Dear Readers:

We are happy to share with you Issue 28 of the “Fellow Weekly Newsletter,” an interactive project of the Fellow-Yesharim Foundation for Ethical Law, under the leadership of HaRav Yitzchak Berkovits. Designed to stimulate discussion and thought regarding matters of business law and ethics, the Newsletter presents real-life scenarios, for contemplation and debate. Hundreds of Shabbos Tables already benefit from these exciting conversations. “Fellow Weekly Newsletter”, as well as Fellow - Yesharim’s ongoing international educational ventures enjoy the endorsements of HaRav Yitzchak Berkovits, Rabbi Joseph Elias, Rabbi Menachem Nissel and Ben Brafman, Esq.

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CASE 129: The Baffled Babysitter - A Sequel

Thursday afternoon was quite hectic at the Berman home. Hanukkah was just a few days away and the Bermans were hosting the annual community Hanukkah extravaganza. Mrs. Berman needed an extra pair of hands to run some errands and help her care for Hanna and the twins until bath-time at six o’clock.

She decided to hire none other than Sara to pitch in. Sara charges $8 an hour.

Sara arrived at the Berman residence at 2 P.M. sharp. Mrs. Berman already had a series of errands prepared for Sara.

“Please buy 2 jumbo bags of chocolate coins at $10 per bag and two cases of applesauce at $20 dollars per case,” Mrs. Berman instructed Sara, giving her sixty dollars for the groceries – twenty for the chocolate coins and forty for the applesauce.

Mrs. Berman continued, “After the shopping, please take the children out for pizza. A slice of pizza costs $2. Each of the three children will eat one slice and you can take three for yourself. You may take them to the pizza shop of your choosing,” handing Sara an additional twelve dollars for the six slices of pizza.

“On your way home Sara, would you please stop off at Lord & Taylor™ and return this pair of green shoes I bought yesterday?

“If there is extra time, Sara you can even take the kids to the park.

“Bath-time is at six o’clock, please be back in time.

“Thank you … and good luck.”

Sara left with the three kids, the $72 from Mrs. Berman, and a chance to earn $32 for her four hours of babysitting services.

Sara first went to ShopRite™ to pick up the chocolate coins and the applesauce. ShopRite™ was running some Hanukkah specials, which caught Sara’s eyes:

-Chocolate coins: $10 per jumbo bag; 3 bags for $24.
-Applesauce: $20 a case; buy three - get one free.

Sara had a great idea. She had been planning a Hanukkah party for her music club and decided to cash in on the sales. In addition to Mrs. Berman’s two bags of coins and two cases of applesauce, she paid for an additional bag of coins and case of applesauce. She received her third bag of coins at the discounted price - four dollars instead of ten, and took home two additional cases of applesauce, the third one for which she paid, and the free fourth case of applesauce that came with the purchase of three cases.

The next stop was the Pizza shop. Sara decided to go to Pizza Parlor because she liked their sauce. As she was ordering her six slices ($12), she noticed the price list. The price list read $2 a slice, for $14, you receive the eighth slice + a bottle of soda free. Sara figured she would add $2 for another slice and receive the free eighth slice and bottle of soda. (a $3.50 value bonus)

As she was paying, the cashier handed her a free promotional calendar.

Sara then set out with the kids, the chocolate coins, the applesauce, the extra pizza, bottle of soda and calendar, and – of course – Mrs. Berman’s green shoes towards Lord & Taylor™.

Sara arrived at Lord & Taylor™ with ample amount of time to return the shoes and bring the children home by six. The shoe department was on the third floor, so Sara decided to take her charges up via the elevator. She piled everyone in to the elevator, and pressed the button. As the door was closing, two of the store’s shelf stockers pushed themselves into the elevator.

Sara broke out into a cold sweat. “The number of people in this elevator exceeds the allowed limit,” she thought to herself.

The doors closed and the elevator began its way up.

Well, Sara was right! Between the second and third floor, the elevator stopped. They were stuck in that elevator for an hour until they got out.

Sara was now an hour late. It seemed as though Mrs. Berman would have to start bath-time without the kids!

Sara showed up at the Berman's door at seven o’clock. She helped settle the kids down, but now Mrs. Berman and Sara had some accounts to settle…

Who receives the six-dollar discount for the chocolate coins?
Who receives the free case of applesauce (a twenty-dollar value)?
Who receives the free slice of pizza and bottle of soda (a $3.50 value)?
Who receives the promotional calendar?
Who absorbs the eight-dollar loss due to the additional hour for which Sara babysat - Sara, Mrs. Berman, or Lord & Taylor™

What is the law?

Please email us with your comments and answers at weekly@projectfellow.org.
Read next week's issue for the answer!

LAST WEEK’S CASE

CASE 128

Shira is a party planner. She takes care of the food, props, and paper goods for various events and charges a five-hundred dollar fee for her services, in addition to the cost of the supplies. Mrs. Johnson hired Shira to prepare a graduation party for her eighth graders. Shira gives Mrs. Johnson a quote for two-thousand dollars - $1,500 for the supplies, plus her standard five-hundred dollar fee. When placing the order for the goods, the supplier discounts the order by 40% as a “thank you” for her frequent business.

Can Shira keep the difference, or must she pass the discount on to her customer?

What is the law?

The Answer

The way we view the operation of a party planning business is primarily dependent upon the wording of the advertisements as well as the subsequent dealings with the customers. The business will consequently operate either as a retailer, purchasing the supplies and reselling them to the customer; or as a service provider, purchasing the supplies on behalf of the customer.

If Shira is operating as a retailer, she may purchase the supplies at a discounted price and resell them at any price commensurate with the market value [Bava Metzia Chapter 4].

If, however, Shira is a service provider – merely using her customers’ money (or lending the customer her own money) and purchasing the supplies on their behalf – she must then pass the discount on to her customers. Retaining the 40% discount would be tantamount to pocketing her client’s money illegitimately [Choshen Mishpat 183:9, Ram”a].