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Questbank Interest (Ribis) Declaration and Agreement

This declaration relates to "interest" paid by Questbank ("QB") to its Jewish clients. The beneficial owners of QB hereby advise their Jewish clients:

  1. They are obligated to structure the business so that they do not pay Ribis (defined as engaging in an interest-bearing loan) to their Jewish clients.
  2. The mechanism that they have chosen to use is commonly known as "Derech Knas" and functions in a similar manner to a Heter Iska Kloli. For this Heter Iska to work, its structure must be understood and must be binding on both sides.
  3. This declaration binds the beneficial owners of QB and all of its Jewish clients depositing with QB so that when a Jewish client deposits money, the client agrees to invest according to the structure described below (as an "Investor").
  4. When the Investor deposits money, QB will supply the Investor with pure silver on the following terms:
    1. in exchange for the monies received, QB agrees to arrange and deliver to the Investor pure silver on the same day as the monies are received, at the prevailing market price (the "Silver Amount");
    2. if QB fails to hand over the entire Silver Amount at the agreed upon time pursuant to 4(a) above, the beneficial owners hereby obligate themselves to pay the cash value of the unpaid Silver Amount (the "Cash Value") by 9:00am ET the following day plus an additional percentage of the value (referred to hereinafter as "Interest", the rate of which is the applicable annual interest rate divided by 365 (or 366 on a leap year)), as a penalty payable within a month;
    3. if the Cash Value remains unpaid by 5:00 P.M. ET, QB will arrange for and deliver the Silver Amount to the Investor by 12:00 A.M. at the prevailing market price and that if it fails to hand over the Silver Amount by 12:00 A.M., the beneficial owners hereby obligate themselves to pay the Cash Value of the unpaid Silver Amount by 9:00am ET the following day plus the Interest, payable within a month;
    4. Once interest is paid into the Investor's account, the cumulative sum becomes the Cash Value, and will be rolled over in the same way (i.e. a purchase with a condition stipulating that failure to deliver the Silver Amount on time will incur a penalty);
  5. As long as QB owes money to the Investor, this daily rollover arrangement will continue for a maximum of twenty-five (25) years from the day the funds were deposited.
  6. The Investor retains the right to demand the entire amount owed immediately upon default and the penalties will be payable in full. This means that even if QB makes an early repayment, these penalties will be payable in full even if such payment was made due to the Investor demanding payment immediately upon default.
  7. The system used in this Agreement follows the heter (approbation) mentioned in the Shulchan Aruch HaRav, authored by the Alter Rebbe, HaRav Shneur Zalman of Liadi, Hilchos Ribis (the Laws of Ribis), Seif/Paragraph 46.
  8. QB has accepted the above by means of a Kinyan Sudar (a form of creating a binding legal agreement in Halacha/Jewish law) in a Beis Din Choshuv.
  9. In the event of any conflict between the terms of this Agreement and the terms of any other agreement assumed by the two parties with regard to these funds, the terms of this Agreement shall prevail.
  10. The parties agree that any dispute arising out of or in connection with this agreement will be submitted exclusively to a Beis Din situated in Crown Heights, Brooklyn, New York USA in accordance with and subject to, halacha. For clarity, the parties accept that the Beis Din will have exclusive jurisdiction with respect to any issues or disputes raised by either party with respect to this agreement.
  11. It is agreed that the beneficial owners hereby bind themselves electronically.

Frequently asked questions

What is Ribis and why does Questbank have a special compliance mechanism?
Ribis is the Hebrew term for interest that is prohibited by Jewish law to be charged or paid between Jews. Questbank's beneficial owners are obligated to structure the business so that they do not pay Ribis (interest-bearing loans) to their Jewish clients.
Why does this law only apply to transactions between Jewish individuals?
Torah law specifically prohibits interest-bearing loans only when both the lender and borrower are Jewish.
What is the mechanism Questbank uses to ensure compliance?
The mechanism that Questbank uses is commonly known as "Derech Knas," which functions in a manner similar to a Heter Iska (a general Halachic business partnership agreement). This structure is based on a conditional silver transaction, reframing the transaction so that payments to Jewish clients do not constitute prohibited interest.
How does the "Derech Knas" arrangement differ from a standard Heter Iska?

Both mechanisms are used to permit financial transactions while adhering to the laws of Ribis, but they use different Halachic constructs:

  • Heter Iska: This is a legal instrument that transforms a conventional loan into a business partnership or investment. The funds are no longer a loan but an investment for which the managing partner (the recipient of the money) is an agent who shares the profits (or losses) with the investor.
  • Derech Knas: As implemented by Questbank, this mechanism is structured as a conditional silver transaction. Questbank undertakes to deliver an amount of silver equal to the value of the deposit, and the payment labeled as "interest" is recharacterized as a penalty (knas) triggered upon a failure to deliver the silver on time.
How does the "Derech Knas" mechanism work with my investments, deposits and loans?
When a Jewish client deposits money, the client agrees to invest according to this structure. Questbank undertakes to deliver an equivalent value of pure silver. If Questbank fails to deliver the silver on the agreed-upon time, the beneficial owners are obligated to pay the cash value of the unpaid silver plus an additional amount, referred to as "Interest", as a penalty payable within a month. This unpaid balance and penalty then roll over daily into a new conditional transaction for up to twenty-five (25) years.
Is this a recognized Jewish legal allowance?

Yes. Jewish law permits the imposition of a knas, a penalty where a party fails to complete a sale (see Shulchan Aruch, Yoreh Deah 177:18; Shulchan Aruch HaRav, Hilchos Ribis section 47). The specific structure, known as "Derech Knas", was formulated by Rabbi Mordechai Yaffe (known as the Levush) in his Jewish legal text Ateres Zahav (chapter 167), and is recognized as halachically operative in the Jewish legal text Shulchan Aruch HaRav (Hilchos Ribis section 46), authored by Rabbi Shneur Zalman of Liadi (known as the Alter Rebbe).

The declaration states that the obligation was accepted through a binding act called a Kinyan Sudar conducted before a Beis Din Choshuv (i.e. a significant rabbinic court).

What if Questbank advances funds to customers?
For situations where Questbank advances funds to customers, the company has implemented a binding partnership mechanism that ensures that Jewish clients are not paying Ribis to other Jews for funds that originate from Jewish sources.
What happens in the event of a dispute related to this agreement?
The parties agree that any dispute arising out of or in connection with this agreement will be submitted exclusively to a Beis Din situated in Crown Heights, Brooklyn, New York USA, in accordance with and subject to halacha.
Does this agreement override other terms of service?
Yes. The declaration explicitly states that in the event of any conflict between the terms of this agreement and the terms of any other agreement assumed by the two parties with regard to these funds, the terms of this Ribis agreement shall prevail.