I.

XXIII. Insurance.

XXIV. Fellowship.

XXV. Marine Insurance.

XXVI. Inequality with consent.

F human acts which tend to the utility of others, some are simple, some are compound.

II. Of simple acts, some are gratuitously beneficial, others are of the nature of exchange of one act for another, permutatorial. Beneficial acts are either merely so, or with some mutual obligation. Mere beneficial acts are either discharged in the present time, or stand over for the future. A useful good office is performed in the present time, and of this it is not necessary to speak, since it produces advantage indeed by the recipient, but no effect as of right: so also a donation, by which ownership is transferred, of which we treated above, when we spoke of acquisitions of ownership. As acts standing over for the future, we reckon promises both of giving and of doing; concerning which we have already spoken.

Beneficial acts with a mutual obligation, are those which dispose of any thing without alienation, or so dispose of an act that some effect survives. Such is a concession of the use of a thing, which is called a Loan; and of acts, the undertaking of an office expensive or obligatory, which we may call a Commission; of which kind is a Deposit, namely, the office of keeping a thing in custody. Similar to these acts are the promises of acts, except that, as we have said, these stand over for the future; which also we desire to have understood of the acts now to be explained.

III. 1 Permutatorial acts either separate the parties or produce a community between them. Those acts which separate, diremtorial acts, the Roman jurists rightly divide into these: do ut des: facio ut facias: facio ut des. See Paulus and the Digests. [Dig. xix. 5.]

2 But the Romans except from this division certain contracts which they call nominate contracts*; not so much because they have proper names, (for permutation or exchange, which they exclude from nominate contracts, has also a proper name,) as because, from their more frequent use, they have received a certain force and nature, which may be sufficiently understood by the name, although nothing be said specially. Whence also with regard to them there were certain established formulæ of actions. While in other contracts, which are less frequent, that only was implied which was expressed; and therefore there was not any common and usual form of action, but a form accommodated to the fact, which was therefore called a form in prescript words.

For the same reason, of a more frequent use in the nominate contracts, if certain requisites were present, the necessity of fulfilling the contract was held as the rule; as in sale, if the price had been agreed upon, the contract was good, even re integra, that is, though nothing had been performed on either side: while in the rarer contracts, re integra, there was allowed the liberty of retracting, that is, impunity, because the Civil Law withheld coactive force from those contracts, leaving them to stand on the good faith of the contracting parties only.

3 Natural Law does not recognize these distinctions: for the contracts which are called by men innominate, are neither less natural nor less ancient than the nominate. Nay Exchange, which is reckoned among the innominate, is both older and simpler than Buying. Eustathius, where in the Iliad (B. x.) a public contest is mentioned with a prize appointed, which in Homer is said to be earned, interprets it, taken in exchange, adding, for it is a sort of contract; namely, facio ut des, I work that you may pay. We therefore, following nature, shall refer all diremtory contracts to the three kinds which we have mentioned, making no distinction of nominate and innominate.

4 Hence we shall say that do ut des, I give that you may give, either one thing for another, which is specially called Permutation or Exchange, and is doubtless the oldest kind of commerce: or money for money, to which the merchants give the technical name of Exchange: (Cambium :) or a thing for money, as in Buying and Selling: or the use of a thing for a thing: or the use of a thing for the use of a thing or the use of a thing for money, which is Letting and Hiring. By use, we here mean both the naked use, and that which is combined with the enjoyment of the produce, whether temporary, or personal, or hereditary, or circumscribed in any other way; as that which among the Hebrews continued to the year of the Jubilee. In a Loan, the thing is given, in order that after the lapse of a certain time, the same in quantity and kind may be returned, of things which

:

See E. M. 708, &c.

are estimated in weight, measure, and number, both other things and money.

5 The exchange of act for act may have innumerable kinds according to the diversity of the acts. But facio ut des, is, I act that you may give, either money, (and this includes Letting and Hiring, and Assurance against risk, a contract formerly hardly known, now among the most common,) or that you may give a thing, or the use of a thing.

IV. Acts communicatory, either establish a community of acts, or of property, or property on the one side, acts on the other for the common utility; all which are called Partnership. In which class are included associations for the mutual Protection of ships in time of war, against pirates or other enemies, which is called an Admiralty.

V. Acts are mixed (or compound, § 1) either as principal, or by the accession of another act. [First as principal.] Thus if I knowingly buy a thing for more than it is worth, and give the seller the excess of price, it is partly buying, partly donation. If I promise money to a goldsmith for making rings for me of his own gold, it is partly buying (of material), partly hire (of labour). So in Partnerships it happens that one person contributes acts and money, another money only. And in the Feudal Contract, the concession of the fief is a benefice, but the pact of military service for protection is facio ut facias. And if the fief be burthened with an annual payment, it is, so far, a letting for a money-rent. So money lent to shipowners is partly a Loan and partly Insurance.

VI. Acts are mixed by the accession of another act, as in giving security, and in pledge. For suretiship, if you regard the business which takes place between the surety-giver and the principal debtor, is for the most part a commission: if you regard the business between the creditor and the surety-giver, who receives nothing, it is an act merely liberal: but because this liberal act is added to an onerose contract, it is reckoned with such contracts. So the giving of a pledge seems to be a liberal act, by which the detention of a thing is conceded; but this also takes its nature from the contract which is thus supplied with a security.

VII. All acts useful to others, with the exception of merely beneficial acts, are called Contracts.

VIII. In Contracts, nature requires equality, and in such a way that, from inequality, he who has the worse share, acquires a right. This equality consists partly in the act, partly in the matter concerning which the act is, and in the acts both precedent and principal.

IX. 1 It belongs to the preceding acts, that he who makes a contract about any thing, ought to make known the faults of the thing so far as he knows them, which is not only the usual rule of Civil Laws, but also agreeable to the nature of the act. For between the contracting parties, there is a connexion closer than the

common society of mankind. And in this way we answer the argument of Diogenes of Babylon on this subject, who says that all that is untold is not therefore concealed: and that it is not necessary for me to say all that it is useful for you to hear: thus I need not tell you how the heavens move. For the nature of Contract, having for its object common utility, requires some closer union. So Ambrose and Lactantius. [See.]

2 The same does not apply to circumstances which do not affect the thing itself: as if any one know that there are many ships on their way bringing corn. To tell this is kind and laudable; often so far, that it cannot be omitted without violating the rule of charity: but the omission is not unjust; that is, it is not repugnant to the right of him with whom I deal: so that here that may hold which the same Diogenes said, as Cicero reports*, I bring my wares to market: I offer them for sale: I sell what is my own: not dearer than others; perhaps cheaper, as I have a larger stock. Whom do I wrong? Therefore we are not in general to follow the rule which Cicero lays down, that it is concealment, if those whose interest it is to know anything, you would have ignorant of it for the sake of your gain. That holds with regard only to points which affect the thing itself: as if a house which is to be sold is unhealthy; if it has been ordered by the magistrate to be pulled down: where see the examples which he gives.

3 The faults which are known to the person with whom you deal, need not be mentioned; as the servitude to which the house was subject which Gratidianus sold to Oratas, having bought it of him before: for both parties, having equal knowledge, are on an equality. So Horace; Plato.

X. Nor is it only in the understanding with respect to the matter, but also in the use of the will, that there ought to be a certain equality between the contracting parties: not indeed that if there have gone before any fear justly impressed, that must be removed, for that is extrinsic to the contract: but that no fear is to be unjustly impressed with a view to the contract; or if it be impressed, that it be put away. Looking at this rule, the Lacedæmonians rescinded the purchase of the land which the Thebans had extorted from the possessors by fear. See Xenophon. What exception there is to this in the Law of Nations, we shall see in its own place.

XI. 1 In the principal act of a contract this equality is required, that more be not demanded than is equitable. Which, in beneficial contracts, can hardly have place. For if any one demands some payment for a loan, or for executing a commission, or keeping a deposit, he does no wrong, but he alters the nature of the contract, and makes it, from being gratuitous, become semipermutatory. But in all permutatory contracts this is carefully to be observed. Nor is it enough for any one to say that what the other party has promised

* See E. M. 716.

more than equality, is to be regarded as a donation. For such is not the intention of contracting parties, and is not to be presumed so, except it appear. For what they promise or give, they are to be supposed to promise or give as equivalent to what they are to receive, and as what is done on the ground of such equivalence.

2 Authorities of Chrysostom, Hermias, Levit. xxv. 14 and 17. XII. 1 There remains to be considered, equality in the thing itself, consisting in this, that though nothing was concealed which ought to have been told, nor more exacted than was thought to be due; yet if there be an inequality in the thing itself, though without any fault of the parties; if for instance there was some latent defect, or some error about the price, that also is to be made good, and the difference paid to him who suffers by it; because, in a contract, there was intended, or ought to have been, that each party should have the same value.

2 The Roman law appointed this as the rule, not in every inequality, (for the law does not follow matters to their smallest dimensions, and also wishes to obviate the multitude of lawsuits,) but in a grave inequality, as for instance, one which exceeds the half of the fair price. In fact, laws, as Cicero says, remove what is not equitable, in cases when you can take hold of it with your hand; the philosophers, so far as you can grasp it by reason and intelligence. But those who are not subject to Civil Laws ought to follow that which right reason dictates to them as equitable; and even those who are subject to laws, whenever the question is what is right and pious; since the laws do not create or destroy right, but only deny their support to some rights for certain causes.

XIII. 1 It is to be noted that a certain equality of matter is to be regarded even in beneficial contracts; not a complete equality, as in commutatorial, but one according to the nature of the transaction: so that a person may not be damaged by a benefit which he bestows: for which reason a commissioner or agent is to be indemnified for the expense and loss which he incurs by his agency: and a loanee is bound to make good the thing lent if it be destroyed; because he is bound to the owner, not in respect to the thing alone, that is, by virtue of ownership, as any possessor of it would be bound, (as above said,) but also in virtue of the benefit received: which holds true, except the thing would have perished also, if it had remained with the owner. For in this case, the owner loses nothing by the loan. On the other hand, a depositary receives nothing but a reliance on his good faith: therefore if the thing perish he is not bound; not by reason of the thing, for it no longer exists, and he is no better off for it; nor by reason of his having accepted it, for by accepting it, he bestowed, not received, a benefit. In a pledge, and in a thing hired, a middle way is to be followed: so that he who has accepted the thing is not bound to make it good like a loanee, and yet is bound to use more diligence than a depositary: because the acceptance of