Interest on payment to a contractor
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Question
He had work done by a contractor and delayed paying him, and now, according to the contract, he must pay more. Does this involve a prohibition of ribbit (interest)?
Answer
If it is written in the contract that it is made according to a heter iska, it is permitted to pay. If not, there is no permission to pay. [However, another person may pay the contractor, on condition that he does not stipulate with the debtor that he will later reimburse him for what he paid on his behalf].
Source
Yoreh De'ah, siman 176
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