Agreement made this ________day_____________of________by and between__________________________hereafter known as party of the first part and________________________________hereafter known as party of the second part.
Whereas the party of the second part, is desirous of engaging in a commercial enterprise and/or in the acquisition of bonds and securities and whereas he lacks sufficient personal funds for this purpose, and
Whereas the party of the first part is desirous of granting a loan to the party of the second part for this purpose, and
Whereas the party of the first part is desirous of engaging in a similar commercial enterprise and/or acquisition of bonds and securities, and
Whereas, as Jews, both parties are bound by religious prohibitions against usury which prevent them from seeking or granting an interest-bearing loan,
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. The party of the second part hereby acknowledges receipt of the sum of__________________from party of the first part.
2. The party of the second part has accepted the sum of _______________representing 50% of the total sum received from the party of the first part to be held and invested together with all fruits thereof on behalf of the party of the first part.
3. The party of the second part shall invest this sum and all fruits thereof in a prudent and advantageous manner on behalf of the party of the first part in real estate, merchandise, commercial paper, stock, bonds, commodities or other lawful venture, provided that opportunity for lawful and prudent investment presents itself. Title to all objects of value acquired in this manner and of all fruits thereof shall be vested in the party of the first part.
4. The party of the second part has accepted the sum of ______________representing 50% of the total sum transferred to him as an interest-free loan. The party of the second part shall have the right to co-mingle his funds with those accepted on behalf of the party of the first part to the extent that the party of the second part and the party of the first part each shall have equal proprietary interest in any purchase or investment.
5. The party of the second part hereby obligates himself to utilize the funds transferred. Any purchase of a mercantile nature or investment made by the party of the second part, up to the limit of the sum transferred, shall be deemed to have been made with these funds.
6. The party of the second part shall receive from the party of the first part the sum of $1 per month until the termination of this agreement as compensation for his services as agent of the party of the first part.
7. All remaining profits shall be divided equally between the parties. All losses shall be borne equally by both parties.
8. The party of the second part shall be obligated to place any unexpended funds in a safe-deposit box in a chartered commercial bank and to maintain any merchandise, stock certificates or bonds acquired with these funds in his personal possession at all times. The party of the second part obligates himself to indemnify the party of the first part for any losses sustained as a result of failure meticulously to discharge this obligation. Fulfillment of this obligation is to be substantiated only on the basis of the testimony of two persons qualified to offer testimony. Such qualification is to be understood as meaning qualification in accordance with Jewish law as recorded in Shulḥan Arukh, Hoshen Mishpat.
9. In the event of financial loss, the burden of proof shall be upon the party of the second part to consist solely of the testimony of two qualified witnesses as stipulated in the previous paragraph.
10. The party of the second part anticipates realization of a net profit of at least [20%]** This figure should be equal to twice the stipulated return on the money advanced as provided in the final sentence of this paragraph. The party of the second part anticipates this rate of return both on the portion of the funds borrowed by himself and invested on his own account as well as on the portion invested on behalf of the party of the first part. Thus, in order to realize a profit of 10% on the entire sum transferred, the anticipated return must be 20%. This is so because the party advancing the funds is entitled to profits only on one half of the total sum advanced, i.e., that portion which represents his own investment. per annum of the funds held in this manner after deduction of all expenses including compensation of the party of the second part for services as agent. However, the declaration of the party of the second part with regard to the extent of profit, or the absence thereof, shall be accepted only upon administration of a solemn oath before a rabbinic tribunal. Party of the first part hereby agrees to forgive any and all further claims against the party of the second part upon payment of a sum equal to [10%] per annum of the sum transferred in addition to return of the sum transferred.
11. The party of the second part agrees to return the funds accepted under this agreement in _______________ equal installments payable on the______________of each month of the civil calendar. An accounting and payment of any and all profits as provided in the previous paragraph shall be made at the same time.
12. In the event of failure to return any portion of the funds in accordance with the previous section by reason of loss or of non-realization and non-payment of the anticipated profit as stipulated in paragraph 10 the entire sum advanced under the terms of this agreement shall be due and collectible.
13. In the event of any controversy arising out of, or related to, this agreement the same shall be submitted to binding arbitration in accordance with Jewish law by a tripartite panel of qualified rabbis versed in such law. Each party shall be entitled to appoint one member of this panel; the two members appointed in this manner shall appoint the third member of the panel. The award by a majority of such panel shall be confirmed in any court of competent jurisdiction pursuant to the CPLR without any right of appeal therefrom. An action shall be brought before a civil court only in the event of failure of one of the parties to appear before a rabbinic tribunal and only upon leave from a rabbinic tribunal.
Made in the Borough of Manhattan, City and State of New York on the date aforesaid.
WITNESS
Name:
Address:
WITNESS
Name:
Address: