Bava Metzia 67 - Excessive Penalty on Default is Illegal (Finds)

The rule that the lender takes a field pledged for a loan of smaller value is only sometimes valid. It applies only to a case where the borrower transmitted the field to the lender at the beginning of the term so that the sale is canceled retroactively upon payment. In the interim, the produce is deposited with a third party because, for the lender, the crop may constitute interest if the borrower pays, and the borrower can't take it because the field is not his.

Typically, however, any agreement that calls for an excessive penalty IF the party defaults is NOT binding. If the borrower mistakenly gives the field up, the lender returns the field and the fruit he collects.

Art: Slender with the assistance of Shallow Courting Anne Page by Charles Robert Leslie

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