Question
I run a girls' seminary in Israel for girls from Chutz Lo'oretz, primarily Americans. The bulk of our expenses are paid in shekels. But since the parents are in Chutz Lo'oretz the amount we charge is denominated in foreign currency. We conducted registration for next year last winter when the dollar was in the 3.2-3.3 range and charged on the presumption that the dollar would remain in that range. However, since then the dollar has dropped to 2.8 which makes it not worthwhile to open for the coming school year at the original dollar rates. At the time of registration, parents paid one month's tuition. Do we have the right to adjust our prices at this point?
Answer
In order to arrive at an answer, we must examine three issues. First, we must determine what relationship the seminary has with the parents who registered their children. Second, we must study whether under normal circumstances the seminary may raise prices. Finally, we must decide whether, given the dollar's plummet, the seminary may raise its prices.
In order to characterize halachically the relationship the seminary has with the parents, we must consider what parents expect from the seminary. Even though the seminary must perform many tasks they are all geared towards providing an education for its students.
Halacha divides all employees into two subclasses: kablanim and sechirim. The basic criterion for determining whether an employee is a kablan or a socheir is whether he or she is paid to work specific hours or is paid to accomplish a task. Since the seminary is paid to accomplish a task, its relationship with the parents is that the seminary is a kablan and the parents are its employer.
We must now study the laws of kablanim to decide whether one who is a kablan is allowed to quit. There are two stages in the employment of a kablan. The first stage is before a kinyan is performed. At this stage, since there is only a verbal agreement, the only reason a kablan may possibly not quit is because if he does so, he will be considered a mechusar amono, an untrustworthy person, which one is not allowed to be. We will begin by exploring this possibility.
If circumstances change in a significant manner between the time an agreement is made and the time the agreement is to be carried out, there is a dispute (See Mishpatei Yosher vol. 1, mechusar amono 3, 1) among the Rishonim and the poskim whether one who cancels that agreement is considered a mechusar amono. However, if the change is unusually significant then many maintain (See ibid. 2B) that all agree that one who cancels his commitment is not a mechusar amono, since he never gave his word in the new circumstances.
The second stage in an agreement between a kablan and his employer is after a kinyan is performed. Often the kinyan that is made is by virtue of the employee's beginning to work which constitutes a kinyan (CM 333, 2). However, at this stage in your case, since it is still prior to the beginning of the school year, this kinyan was not performed. However, when the parents gave a down-payment they did perform an act of kinyan of kesef since payment of even one peruto (about a dime) suffices (See CM 190, 2) to perform a kinyan of kesef.
Once an act of kinyan is performed, the consensus (See Mishpatei Yosher volume 3: 5, 14) is that a kablan does not have the right to quit. According to some opinions, beis din can even physically coerce a kablan to perform the work that he agreed to perform.
In the case of seminaries, they often insert conditions that allow them to expel a student, i.e., to back out of their agreement with the parents of the student. However, if those conditions are not met, under normal circumstances, the seminary cannot cancel its commitment to perform the actions it committed itself to perform at registration. Thus, in normal circumstances the seminary will not be able to raise its prices after accepting a down-payment from the parents. We must investigate whether in the present situation, due to the change in circumstances, the seminary has the right to cancel its original agreement.
The basic source is a ruling of the Taz (Even Ho'ezer 114, 2) in the case of a person who committed himself unequivocally at the time of marriage to pay for the sustenance of his new wife's daughter from a previous marriage, for five years. SA rules that even if the price of food rises in the interim the husband must abide by his commitment. The Taz comments that nevertheless, if there was an unusually sharp increase in the price of food, the husband may back out of his commitment.
The Taz proves his contention from a ruling of SA (CM 225, 3) where a seller committed himself to refund his customer the entire purchase price if the customer is forced to part with his purchase. SA rules that if the reason the customer was forced to part with his purchase is an unusual and unforeseen circumstance, e.g., he bought a field which was subsequently ruined by flooding, the seller is not obligated to refund the purchase price because a person who undertakes a commitment does not take into account unusual circumstances. The Taz compares the commitment to provide for the stepdaughter's sustenance to the commitment to refund the customer's money.
Although the Taz does not bring this, one can cite further proof from the Gemoro (Gittin 73A) where two Amoraim hired a shipper to transport sesame seeds across a river but the river unexpectedly became impassible. Since the shipper committed himself to transport the sesame seeds come what may, the Amoraim thought they could force the shipper to hire porters to transport the seeds. However, their rebbi, Rovo, disagreed because he reasoned that, since it was unusual for the river to become impassible, the shipper had never committed himself to transport the sesame seeds under the present circumstances.
The ruling of Taz is somewhat controversial. Even though many (e.g., Beis Shmuel, Haflo'o, Imrei Binah (Halvo'o chapter 49)) agree, a sizable number (Avnei Meluim, Sha'ar Mishpot) disagree.
For example, the Sha'ar Mishpot (60, 4) disagrees and cites as proof a ruling of the SA (YD 232, 16) where a person committed himself to give a dowry and later it transpired that the debts that were owed to him which he had relied on when he committed himself became uncollectable, leaving him unable to afford the dowry. The implication of SA – and that is the ruling of the Beis Hillel (50, 6) – is that he remains obligated to fulfill his commitment.
The Sha'ar Mishpot deduces that only in cases similar to the Gemoro's case, where a person accepted liability for future events and the unusual event occurred prior to the onset of his obligation, does the obligation not begin. However, if the obligation already began prior to the unusual circumstance (like a person who previously obligated himself to support his step-daughter or to provide a dowry), since the obligation existed previously, an unusual circumstance that makes it very difficult to fulfill his obligation does not free him from fulfilling his existing obligation. If one follows this approach, since the seminary's obligation started when it accepted payment which was before the unusual change in exchange rates, the seminary cannot back out of its agreement.
Since this disagreement among the major poskim remains an undecided dispute (sfeiko dedino), the parents cannot force the seminary to keep their daughter if they are unwilling to pay an adjusted amount to compensate for the dollar's fall.
This was essentially the ruling of five of the leading avos beis din (The ruling is found in Hayoshor Vehatov 7, page 26.) in 2008 when the value of the dollar also suffered a precipitous fall. They set a condition then in the case of kablanim-contractors, of a sixteen percent decrease in value between the time the agreement was made and the time the work was carried out. However, sixteen percent does not seem to be a universal amount because they wrote that the contractor should remain with a reasonable profit.
Even though we wrote at the outset that the proprietors of the seminary are kablanim, they would agree that if the seminary's profit margin is not very large, as you wrote, the seminary can refuse to allow the student to begin the school year if the parents do not agree to an adjustment in price. We note that the seminary must return the down payment (minus a small amount for expenses) to the parents if they do not wish to pay the higher amount, since it is the school who is canceling the agreement.
In conclusion: The seminary cannot force anyone to pay a higher amount but it can cancel the registration of a student whose parents do not agree to pay the higher price. At the same time the adjusted price must be in proportion to the dollar's fall and the seminary must return the down payment to those parents who do not agree to pay the higher amount.
