Chapter III
Duties Regarding the Exchange of Property
Section 1 The Sale of Goods
§ 1. The Just Price.
We dealt in the last chapter with the duties which attached to property in respect of its acquisition and use, and we now pass to the duties which attached to it in respect of its exchange. As we indicated above, the right to exchange one’s goods for the goods or the money of another person was, according to the scholastics, one of the necessary corollaries of the right of private property. In order that such exchange might be justifiable, it must be conducted on a. basis of commutative justice, which, as we have seen, consisted in the observance of equality according to the arithmetical mean. We further drew attention to the fact that exchanges might be divided into sales of goods and sales of the use of money. In the former case the regulating principle of the equality of justice was given effect to by the observance of the just price; in the latter by that of the prohibition of usury. We shall deal with the former in the present and with the latter in the following section.
The mediæval teaching on the just price, about which there has been so much discussion and disagreement among modern writers, was simply the application to the particular contract of sale of the principles which regulated contracts in general. Exchange originally took the form of barter; but, as it was found impossible accurately to measure the values of the objects exchanged without the intervention of some common measure of value, money was invented to serve as such a measure. We need not further refer to barter in this section, as the principles which applied to it were those that applied to sale. Indeed all sales when analysed are really barter through the medium of money. That Aquinas simply regarded his article on just price1 as an explanation of the application of his general teaching on justice to the particular case of the contract of sale is quite clear from the article itself. ‘Apart from fraud, we may speak of buying and selling in two ways. First, as considered in themselves; and from this point of view buying and selling seem to be established for the common advantage of both parties, one of whom requires that which belongs to the other, and vice versa. Now whatever is established for the common advantage should not be more of a burden to one part than to the other, and consequently all contracts between them should observe equality of thing and thing. Again, the quality of a thing that comes into human use is measured by the price given for it, for which purpose money was invented. Therefore, if either the price exceed the quantity of the thing’s worth, or conversely the worth of the thing exceed the price, there is no longer the equality of justice; and consequently to sell a thing for more than its worth, or to buy it for less than its worth, is in itself unjust and unlawful.’2 When two contracting parties make an exchange through the medium of money, the price is the expression of the exchange value in money. ‘The just price expresses the equivalence, which is the foundation of contractual justice.’3
The conception of the just price, though based on Aristotelian conceptions of justice, is essentially Christian. The Roman law had allowed the utmost freedom of contract in sales; apart from fraud, the two contracting parties were at complete liberty to fix a price at their own risk; and selfishness was assumed and allowed to be the animating motive of every contracting party. The one limitation to this sweeping rule was in favour of the seller. By a rescript of Diocletian and Maximian it was enacted that, if a thing were sold for less than half its value, the seller could recover the property, unless the buyer chose to make up the price to the full amount. Although this rescript was perfectly general in its terms, some authors contended that it applied only to sales of land, because the example given was the sale of a farm.1 However, the rescript was quoted by the Fathers as showing that even the Roman law considered that contracts might be questioned on equitable grounds in certain cases.2 The distinctively Christian notion of just price seems to have its origin in a passage of St. Augustine;3 but the notion was not placed on a philosophical foundation until the thirteenth century. Even Aquinas, however, although he treats of the just price at some length, and expresses clear and categorical opinions upon many points connected with it, does not state the principles on which the just price itself should be arrived at. This omission is due, not to the fact that Aquinas was unfamiliar with these principles, but to the fact that he took them for granted as they were not disputed or doubted.4 We have consequently to look for enlightenment upon this point in writings other than those of Aquinas. The subject can be most satisfactorily understood if we divide its treatment into two parts: first, a consideration of what constituted the just price in the sale of an article, the price of which was fixed by law; and second, a consideration of what constituted the just price of an article, the price of which was not so fixed.
§ 2. The Just Price when Price fixed by Law.
Regarding the power of the State to fix prices, the theologians and jurists were in complete agreement. According to Gerson: ‘The law may justly fix the price of things which are sold, both movable and immovable, in the nature of rents and not in the nature of rents, and feudal and non-feudal, below which price the seller must not give, or above which the buyer must not demand, however they may desire to do so. As therefore the price is a kind of measure of the equality to be observed in contracts, and as it is sometimes difficult to find that measure with exactitude, on account of the varied and corrupt desires of man, it becomes expedient that the medium should be fixed according to the judgment of some wise man…. In the civil state, however, nobody is to be decreed wiser than the lawgiving authority. Therefore it behoves the latter, whenever it is possible to do so, to fix the just price, which may not be exceeded by private consent, and which must be enforced.’…[1] Biel practically paraphrases this passage of Gerson, and contends that it is the duty of the prince to fix prices, mainly on account of the difficulty which private contractors find in doing so.2
The rules which we find laid down for the guidance of the prince in fixing prices are very interesting, as they show that the mediæval writers had a clear idea of the constituent elements of value. Langenstein, whose famous work on contracts was considered of high authority by later writers, says that the prince should take account of the condition of the place for which the price was to be fixed, the circumstances of the time, the condition of the mass of the people. The different kinds of need which may be felt for goods must also be considered, indigentice naturæ, status, voluptatis, and cupiditatis; and a distinction drawn between extensive and intensive need—the former is greater ‘quanto plures re aliqua indigent,’ the latter ‘quanto minus de illa re habetur.’ The general rule is that the prince must seek to find a medium between a price so low as to render labourers, artisans, and merchants unable to maintain themselves suitably, and one so high as to disable the poor from obtaining the necessaries of life. When in doubt, Langenstein concludes, the price should err on the low rather than the high side.1 Biel gives similar rules: The legislator must regard the needs of man, the abundance or scarcity of things, the difficulty, labour, and risks of production. When all these things are carefully considered the legislator is in a position to fix a just price.2 According to Endemann, the labour of production, the cost and risk of transport, and the condition of the markets had all to be kept in mind when a fair price was being fixed.3 We may mention in passing that the power of fixing the just price might be delegated; prices were frequently fixed by the town authorities, the guilds, and the Church.4
The passage from Gerson which we quoted above shows that, when a just price had been fixed by the competent authority, the parties to a contract were bound to keep to it. In other words, the pretium legitimum was ipso facto the justum pretium. On this point there is complete agreement among the writers of the period. Caepolla says, ‘When the price is fixed by law or statute, that is the just price, and nobody can receive anything, however small, in excess of it, because the law must be observed’;1 and Biel, ‘When a price has been fixed, the contracting parties have sufficient certainty about the equality of value and the justice of the price.’2 Cossa draws attention to the necessity of the fixed price corresponding with the real price in order that it should maintain its validity. ‘The schoolmen talk of the legitimate and irreducible price of a thing which was fixed by authority, and was for obvious reasons of special importance in the case of the necessaries of life…. The legitimate price of a thing as fixed by authority had to be based upon the natural price, and therefore lost its validity and became a dead letter the moment any change of circumstances made it unfair.’3
Notes
1 II. ii. 77, 1.
2 This opinion was accepted by all the later writers, e.g. Gerson, De Cont., ii. 5; Biel, op. cit., IV. xv. 10: ‘Si pretium excedit quantitatem valoris rei, vel e converso tolleretur equalitas, erit contractus iniquus.’
3 Desbuquois, ‘La Justice dans l’Echange,’ Semaine Sociale de France, 1911, p. 167. Gerson says: ‘Contractus species est justitiae commutativae quae respicit aequalitatem rei quae venditur ad rem quae emitur, ut servetur aequalitas justi pretii; propter quam aequalitatem facilius observandum inventa est moneta, vel numisma, vel pecunia,’ De Cont., ii. 5.
1 Hunter, Roman Law, p. 492.
2 Ashley, op. cit., p. 133.
3 ‘Scio ipse hominem quum venalis codex ei fuisset oblatus, pretiique ejus ignarum ideo quiddam exiguum poscentem cerneret venditorem, justum pretium, quod multo amplius erat nec opinanti dedisse’ (De Trin., xiii. 3).
4 Palgrave, Dictionary of Political Economy, tit. ‘Justum
Pretium.’
2 Op. cit., IV. xv. 11.
1 Roscher, Geschichte, p. 19.
2 Op. cit., IV. xv. 10.
3 Studien, vol. ii. p. 43.
4 Endemann, Studien, vol. i. p. 40; Roscher, Political
Economy, s. 114.
1 De Contractibus Simulatis, 69.
2 Op. cit., IV. xv. 10.
3 Op. cit., p. 143.