9. Obligations: Common Principles and Obligations Arising from Contracts Flashcards
Obligations in General
> J. 3. 13pr: “An obligation is a legal tie which binds us to the necessity of making some performance in accordance with the laws of our state.”
Legal tie = vinculum iuris.
Situations where a person has incurred a personal liability for which he is answerable at law.
Rights and duties in personam - Paul: “binds another person to give, do, or perform something for us.”
How were contracts incurred?
-contracts made by parties
-delicts committed by one against another.
Obligation: duty arose on the one incurring the obligation and the other had a right to enforce that duty by legal action (an actio in personam) - award for damages.
So for P, could be seen as an asset, a res incorporeales so G put in law of things.
Classification of obligations
- Ius civile vs. ius honorarium (and later prob mid 2nd C AD - natural obligations added too).
- Unilateral and bilateral.
- Stricti iuris and bonae fidei.
>Unilateral - stricti iuris - delict.
>Bilateral - bonae fidei - contract.
Natural Obligations
> Not legally enforceable agreements but could have legal consequences.
Slave and master, PF and his family.
Source of Obligation
> Most important classification of obligations was according to its source (causa).
Gaius Golden Words - delict, contract, ‘special right’.
J. 3. 13. 2: 4 - contract, delict, quasi-contract, quasi-delict.
Could Q-D & Q-C equal special right? Unlikely though as G regards obligations as arising from ius civile and Q-D is a product of praetorian intervention.
Justinian’s classification of obligations
> Obligations arose from 4 sources:
- Contract
- Quasi-contract
- Delict
- Quasi-delict
Justinian’s classification of obligations - contracts
> Contracts = agreement enforceable at law:
1. Consensual = informal agreement leads to obligation.
2. Verbis = Obligation made by saying set words.
3. Re = obligation made through delivery of a thing, e.g. loan, deposit.
4. Litteris = originally made by HoF writing in a ledger but by J, it was simply acknowledgement of a fictitious loan.
J’s 4-fold classification is insufficient as it doesn’t take into account pacts and innominate contracts:
-doesn’t want to disturb symmetry?
-Zimmerman: J influenced by symbolism of numbers, 4 relates to secular structure of world.
Justinian’s classification of obligations - quasi-contract
> Situations not strictly contractual, but liability in personam still arose.
No unifying link.
E.g. negotiorum gestio = performing services for another person without their consent.
E.g. unjust enrichment.
Justinian’s classification of obligations - delict
> Obligations arising form the commission of civil wrongs.
>Delicts had penal consequences.
Justinian’s classification of obligations - quasi-delict
> Untify and ununified category.
Common Features of Roman Contracts
> RL of contracts = law of discrete transactions with no unifying principle except necessity of an agreement.
Early Rome, law revolved largely around a single contract - stipulatio.
But later the law of contract became the law of contracts.
Stricti iuris came from ius civile (formula of action empowered the iudex to apply his equitable discretion to the facts of the case.)
Bonae fidei introduced through ius honorarium.
Stricti iuris contracts, e.g. stipulatio, required strict observance of outward formalities of the act.
Number of common features but no ‘general principle of contract.’
Consensus
> Agreement was essential especially in consensual contracts.
Genuine meeting of minds = consensus ad idem at moment contract made.
Unresolved ambiguity in the language could render the contract void however, the judge tried to resolve through interpreting the conduct and custom.
As last resort, ambiguities were construed against the party regarded as having the principal role in the formulation of the particular term in the question.
Paul, Sabinus, book 5: “vendor could have declared his will more explicitly.” D. 18. 1. 21.
Even if language was unambiguous, consensus may still be lacking due to mistake, duress or fraud.
Mistake - general
> In RL, need for strict consensus led to wider role for rules on mistake than in CL.
Fatal mistakes:
1. Mistaken transaction (error in negotio)
2. Mistaken subject matter (error in corpore)
3. Mistaken identity (error in persona)
4. Mistake in quality of subject matter (error in substantia).
Mistake would make the contract void, but there could still be legal action, e.g. if buyer recovered sale price, the vendor could bring an action to recover the good.
Mistake - mistaken transaction
> Error in negotio.
Parties mistaken about type of transaction intended.
E.g. one thought loan and the other sale.
Mistake - mistaken subject matter
> Error in corpore.
Mistake over identity of the contract’s central object.
Contract still valid if mistake was about identity of accessory thing.
Mistake - mistaken identity
> Error in persona.
Mistake over identity of other party.
Only if identity of other party was relevant to the contract.
Mistake - mistake in quality
> Error in substantia.
Only post-classical.
Mistake regarding quality of subject matter of the contract.
Could only invalidate BF contract, not SI.
Had to be a fundamental mistake.
Fundamental = i.e. something sold from different category to that which the buyer presumed.
Fundamental - unclear, interpolation?
Duress
> A contract was made under duress if the party had been threatened with ‘serious evil’ unless he consented to the contract.
Effect of duress varied due to contract type:
1. Stricti iuris under duress:
-was still valid in archaic and pre-classical period, but one would hope that the praetor prevents agreement’s enforcement or grants restitutio.
-late Republic, the exceptio metus (‘the defence of duress’) was allowed to prevent enforcement and an actio metus was allowed for those who suffered loss due to duress.
2. BF contract wasn’t necessarily invalid, but judge took into account.
A contract made through force, no matter the type, was invalid.
Fraud
> Ulpian, Edict, book 11: “every kind of cunning, trickery or contrivance practiced in order to cheat, trick or deceive another.” D.4.3.1.2.
SI contracts = no defence nor remedy until into of exceptio doli (for defence) and actio doli in the late Republic.
If fraud induced a mistake, which would have invalidated the contract, then regarded as mistake rather than fraud.
What turned an agreement into a contract?
> Contracts only arose from agreements which were actionable at law.
Actionable if there was a causa.
Cause = ground, reason, cause.
Causa
> Sometimes, the form of the agreement constituted the causa, e.g. written ledger in contract litteris, or delivery of the thing in contracts re.
But what was the causa when mere agreement sufficed?
Socio-economic conditions of Rome: consensual contracts established in 3rd C BC as economic necessity to recognise causa so legally actionable.
Could also mean motive for transaction or interdependence of promises.
Possible that causa wasn’t essential to every Roman contracts and that modern scholars have exaggerated.
Capacity
> Not valid unless both parties had the capacity to make the contract.
Illegality and immorality
> Ulpian, Sabinus, book 42: “immoral stipulations have no validity.” D. 45.1.26.
Agreement to perform an illegal or immoral act was a nullity.
Early Emp., statutes could impose a sanction of invalidity, but before in Republic, legislation didn’t necessarily invalidate transactions made in breach of statutory provisions, e.g. lex Cincia on gifts.
Whether transactions were contra bonos mores (immoral) was determined by contemporary standards of morality.
Unclear whether religious and philosophical moral doctrines influenced this concept of good morals.
Impossibility - general
> Celsus, Digest, book 8: “There is no obligation to do anything which is impossible.”
2 types:
1. Initial impossibility
2. Supervening impossibility
Impossibility - initial impossibility
> Agreement was void is agreement was already impossible to perform at the time it was made:
- objective
- impossible in nature of the things for anyone not just the party involved
- could be physically or legally impossible.
Impossibility - supervening impossibility
> Events occurring after contract made makes agreement impossible to perform.
Contract remained valid but wasn’t legally enforceable unless he was to blame for the frustrating event or if he was in mora (in delay).
Mora: party’s failure to satisfy his obligations properly.
Privity
> Contract is made between stipulator and promisor.
Can’t be enforced by or against 3rd party.
“Privity is built into form.” Weir.
Strictly enforce, but potentially some exceptions in later RL, e.g. J introduced rule that a promise to benefit/bind heirs of parties was enforceable by or against those heirs.
Modalities
> Clause in the contract which could delay a performance (a suspensive condition) or could undo it (resolutive condition) by making it subject to the occurrence of an uncertain future event.
Initially only 1 modality = suspensive condition.
Developed resolutive condition = developed in classical & Justinianic RL.
Common Features of Roman Contracts - list
- Consensus (mistake, duress, fraud).
- Causa
- Capacity
- Illegality & immorality
- Impossibility
- Privity
- Modalities
Consensual Contracts
> Bilateral and bonae fidei.
Developed due to needs of expanding Roman economy and peregrine praetor influential in its development as influx of foreigners.
4 types:
1. Sale (emptio venditio)
2. Letting and hiring (locatio conductio)
3. Mandate (mandatum)
4. Partnership (societas).
Consent of parties was sufficient in consensual contracts.
Sale - general
> Emptio venditio.
Archais law, mancipatio or stipulatio required for sale but their form made them an inconvenience especially as peregrine were commonly vendor/buyer.
Essential requirements = agreement about thing sold and its price.
1. Agreement, 2. Thing, 3. Price.
Sale - agreement
> Consensus = agreement of wills.
No need to prove agreement had occurred in each others’ presence.
Proof = conduct, arra, writing.
Parties conduct often constituted proof.
Practice of giving arra made proof straightforward.
Arra never required just provided proof of serious intent.
G.3.139: “arra is [merely] evidence of a contract of sale having been concluded.”
Arra = token of GF, seriousness of purpose given by the buyer, e.g. money (deposit), or item of value (ring).
Buyer defaults = forfeits arra.
Seller defaults = returns arra twice over (Greek practice so maybe Romans adopted).
Writing as evidence became increasingly common in the Empire. J = contract not binding until put into writing, either party could withdraw until then but arra was forfeited.
The Thing Sold - general
> Generally, anything (corporeal or incorporeal) could be sold except those excluded from commercium.
Some exceptional categories:
1. Prohibited things.
2. Things excluded from private ownership.
3. Things belonging to the purchaser.
4. Non-existent things (perished, future).
5. Res aliena.
6. Generic things.
The Thing Sold - prohibited things
> ‘Observances of the state’ forbade the sale of things in certain circumstances.
E.g. in early Emp, one couldn’t buy a house with view to demolish it for profit.
The Thing Sold - things excluded from private ownership
> If the purchase knew the facts then the contract of sale was invalid.
J.3.23.5: “If he is misled by the seller and buys them as private or secular, he can bring an action on purchase against the seller, on the ground that he has not been allowed to remain in possession. The action will allow him to recover his interest in not being misled.”
If the purchaser didn’t know he was buying such things, the sale could have legal effect to the extent of recovering the value of his bargain.
The Thing Sold - things belonging to the purchaser
> =nullity.
If buyer bought property in which he held a proprietary interest, sale was valid to the extent that the buyer’s title had been incomplete, e.g. co-owner.
The Thing Sold - non-existent things general
> Pomponius, Sabinus, book 9: “There can be no sale without a thing to be sold.”
Distinction between future and perished things.
The Thing Sold - non-existent things - perished things
> Sale was void if property lost its identity or perished before the contract was made even if only part of it did.
Less than half a house, then purchaser still had to honour contract but vendor relieves him of payment of the amount by which the value decreased.
What is half a house? Is half a house even worth having? Is it still a house?
If both knew = void.
If buyer knew but not seller = contract stands.
If seller knew but not buyer = no sale exists.
The Thing Sold - non-existent things - future things
> Recognised due to need to sell potential agricultural produce.
Distinction between sale of an expected thing (emptio rei speratae) and sale of a chance (emptio spei).
Emptio rei speratae = conditional sale = thing had to materialise in future = no thing then no obligation.
Emptio spei = took chance so took risk = paid even if the thing didn’t materialise.
Difficult distinction to draw:
-depended on buyer’s intention.
-next year’s fruit crop = expected = there will be one even if its poor.
-next catch in fisherman’s net = chance = there could easily be no catch.
Existing inheritance could be sold, but not a future one. Dissuades unseemly dealings.
The Thing Sold - res aliena (another’s property)
> Could still be sold if buyer and seller were unaware of the 3rd party’s rights but purchaser had to return property to owner and could sue purchaser for breach of seller’s duties to guarantee against eviction.
If they knew = ‘stolen goods’ = no obligations are formed unless vendor knew and buyer didn’t where delictual liability for theft for dishonest handling of another’s property.
The Thing Sold - generic things
> Source of goods had to be sufficiently identified for the contract of sale to be valid.
Otherwise there was no sale.
The Price - general
> Ulpian, Sabinus, book 1: “There is no sale without a price.” D.18.1.2.1.
- The price had to consist of money
- The price had to be genuine (verum)
- The price had to be certain, or at least ascertainable.
The Price - the price had to consist of money
> Established in late classical.
Sabinians vs Proculians:
-Sabinians believed that the price in sale need not consist of money and that exchanging things constituted sale.
-Proculians believed that sale and exchange were dissimalr as sale consisted of the exchange of not two things, but money and a thing. Is money not a thing?
Proculians prevailed as it was easy to distinguish between buyer and seller if money was used, which is necessary as buyers and sellers have different duties and remedies.
Paul, Edict, book 33: “In exchange, one cannot discern which party is vendor, and which is purchaser.” D.18.1.1.1.
Could consist of money plus performance of a service or a thing (as could still make distinction between buyer and seller).
The Price - the price had to be genuine (verum)
> Price must be intended to be paid and not a sham.
If shame or derisory then it was considered a gift not sale.
Later Empire:
-laessio enormis = rule whereby if land was sold for less than half of its market value then the seller could rescind the contract unless buyer made up the difference.
-this protected small landowners against powerful neighbours and speculators.
-unknown if extended to movables.
The Price - the price had to be certain, or at least ascertainable
> Had to be certainty of price as well as of subject matter.
Parties had to agree on price, otherwise = void.
“certum est quod certum reddi potest” = “that is certain which is capable of being made certain.”
So sale valid if price, though not fixed, was ascertainable by reference to verifiable facts.
Once contract made
> Once parties had agreed on subject matter and price, the contract was perfect, i.e. fully made.
Parties acquired certain duties and the risk of damage to the property sold was transferred to the buyer.
Transfer of risk and accretions
> Doctrine of risk = if neither party is at fault, who is to bear the loss if the property is damaged, lost, or destroyed?
Risk of loss lay with the seller before the contract became ‘perfect’.
Once perfect, loss passed to buyer however, an agreement could be made in the contract for otherwise.
Buyer was entitled to any fruits/accretions once sale completed.
If seller was in mora, e.g. because of late delivery, he bore risk of any damage.
Separation of risk and ownership = questionable but probably stemmed from the early nature of sale which was immediate (i.e. handing over of goods and money simultaneously.)
Duties of Seller - general
> 4 principle duties:
- Care for property before delivery
- Deliver it with vacant possession
- Warrant against eviction
- Warrant against defects
Duties of Seller - care for property before delivery
> Consequence of the separation of risk and ownership.
Bonus Paterfamilias standard of care so liable even for slight acts of negligence.
Buyer only bore the loss if the seller was blameless (e.g. accident).
In the classical period, the seller may have also been liable for custodia, which is strict liability for the safety of property.
Therefore, only not liable is natural events of vis maior (‘overwhelming force’) e.g. floods, storms, violent theft (robbery).
Duties of Seller - delivery with vacant possession
> Delivery at agreed place and time so long as buyer had paid price or was willing and able to do so.
No agreement on delivery time then assumed to be immediately given reasonable time to ensure property in a deliverable state.
No place agreed then assumed that place was where contract was made.
Delivery of thing and fruits/accretions which had occurred since contract was made.
Accessories delivered too, e.g. slaves and clothes, beasts of burden and trappings, land and fixtures.
Vacant possession = legally protected possession.
Property had to be free of any charges/encumbrances.
Seller was not under a duty to transfer ownership because it was more commercially convenient as obviates need for seller to prove ownership.
Duties of Seller - guarantee against eviction
> Guarantee didn’t prevent an eviction but it entitled the buyer to sure for damages when evicted.
As the duty evolved, the buyer’s position improved:
1. Archaic/pre-classical law: evicted buyer had no remedies unless conveyed through mancipatio, then under 12Ts, an actio auctoritatis was available to recover double the price. It was common practice for seller to make a stipulation to compensate the buyer in case of eviction - usually for double the price (stipulatio duplae).
2. By classical, it was considered a breach of GF for the seller to refuse the necessary stipulation and could be sued for refusing to do so.
3. During classical, guarantee against eviction was implied in all contracts of sale. The actio empti was available for recovery of a simple indemnity but buyer could still request a stipulatio duplae.
Sometimes, actio empti was preferable as unliquidated damages could be recovered not just fixed sum.
Duties of Seller - guarantee against defects - general
> Patents vs. latent defects.
Patent = defects which the buyer was aware of, or were so obvious that he should have been aware of them.
Latent = those other than patent.
Duties of Seller - guarantee against defects - patent
> Patent = defects which the buyer was aware of, or were so obvious that he should have been aware of them.
Seller not liable for such defects, even if he’d given an express undertaking as to soundness.
Duties of Seller - guarantee against defects - latent
> Archaic & pre-classical law, seller not liable unless he’d given an express undertaking of soundness of goods then he was liable for breaching it.
Mid-Republic: dishonesty by seller made him liable for defects he was aware of under the actio emptio.
Late Republic, the increase in slave and cattle dealers led to the aediles issuing edicts which developed the contract of sale.
Edict demanded that the seller declares slave’s known defects and undertakes that the slave was free from undeclared defects. If refused to then buyer still had remedies:
-action for recission (actio redhibitoria) for 2 months.
-action for dimintion (actio quanti minoris) for 6 months.
If seller took undertaking then buyer had 6 months for actio redhibitoria or a year for actio quanti minoris.
Edict introduced implied guarantee of quality so remedies were available even if seller was unaware of the defects.
A similar edict was introduced for beasts of burden and also imposed liability for ‘what has been said or promissed’ - dicta promissave - extended liability beyond guarantee.
Unclear when edicts were extended to everything (but probs by J):
-Ulpian, Curule Aediles’ Edict, book 1: “It must be realised that this edict applies to all sales, not only those of slaves but also those of anything else.” D.21.1.63.
Latent defects - Action for recission
> Actio redhibitoria.
Recover full purchase price, with interest, on returning slave to the seller.
Only for serious defects.
Latent defects - action for diminution
> Actio quanti minoris.
Less serious defects.
Recover part of the purchase price.
The actio empti
> =Main remedy for the buyer in the contract of sale for breach of the seller’s duties.
Actio empti vs. actions introduced by the aediles: damages could be recovered under the actio empti (not just reduction in price) and the action wasn’t subject to the short time limitation of the aedilitian remedies.
Possibly assimilated in late law.
Measure of damages was based on buyer’s interest in thing sold so consequential loss could be recovered (if for defective goods consequential loss only available if seller knew of defects).
J ruled that buyer couldn’t recover more than double the price of the property that he had bought.
Duties of the buyer - general
- Pay the price
- Accept delivery
- Reimburse expenses
Duties of the buyer - pay the price
> Pay price at agreed time or if none agreed than at time of delivery.
Couldn’t sue under actio empti until paid price.
Seller breached duties or failed to deliver then didn’t have to pay.
Interest up to legal max (6% under J) payable if buyer delayed payment without good cause. Judge decided interest if no agreement made.
Duties of the buyer - accepting delivery
> Accept delivery at agreed time and place unless seller breached duties then could delay acceptance.
Buyer = liable for not accepting delivery and seller’s duty to safeguard property no longer applied unless he acted in BF.
Duties of the buyer - reimbursing expenses
> Buyer bore cost of safeguarding property between time contract made and delivery.
Seller could recover expenses properly incurred.
Seller’s remedy = actio venditi = measure of damages assessed on basis of seller’s interest in the sale taking place.
Variation by pacta - general
> Pacta = special terms or clauses agreed by the parties, which could vary the legal effects of the contract of sale.
Terms agreed at time of contract then = fully enforceable but those made after only had effect as defence.
Most common pacts:
1. Seller’s right to withdraw
2. Seller’s right to accept a better offer
3. Seller’s right of first refusal
4. Buyer’s right to reject.
Variation by pacta - seller’s right to withdraw
> Price not paid by certain date then seller could recover property & call off sale.
Relevant where buyer receives goods and agrees to pay later.
Forfeiture clause.
Seller couldn’t sue for price once opted to withdraw from the contract except where buyer had damaged property when actio venditi for compensation in addition to the forfeiture clause could be used.
Variation by pacta - seller’s right to accept a better offer
> Seller could call off sale if he received a better offer by a certain date.
Original buyer given opportunity to match it.
Objective - better offer? Increased price, convenient payment, earlier payment, more reliable person?
Variation by pacta - seller’s right to first refusal
> Could buy back property if buyer sold in future.
>Had to match offers to secure purchase.
Variation by pacta - buyer’s right to reject
> Buyer can reject the goods if found to be unsatisfactory after a period of trial.
Sale of certain consumables, e.g. wine, sale on approval was the usual practice.
If buyer didn’t taste within specified period, he was deemed to have approved the purchase.
Property held on approval damaged or destroyed without buyer’s fault then seller bore loss.
Letting and hiring - general
>Locatio conductio. >Hire = bilateral bonae fidei contract. >The locator let out a thing, or his services, or the completion of a piece of work to the conductor. >Gaius, Common Matters, book 2: "Lease and hire is close to sale and purchase, and it is formed by the same rules of law." >3 different types of hire: 1. Hire of a thing 2. Hire of services 3. Hire of a piece of work
Letting and hiring - hire of a thing
> Locatio conductio rei.
Conductor was allowed the use and enjoyment of a thing by the locator in return for the payment of rent.
Payment normally had to consist of money but exception with agricultural land where the produce of the land was frequently used as payment.
Agree duration period for the hire, but if no agreement then either party could renounce at any time.
Agricultural land - an implied reletting on a yearly basis was allowed - conductor continued as tenant unless given notice.
Implied extension considered as a new lease not continuation of old.
Hire could end through destruction/termination of subject matter or misconduct.
So if locator prevented conductor’s enjoyment, latter could terminate contract and sue for damages.
Death didn’t terminate unless agreed otherwise.
Letting and hiring - hire of a thing - what if locator sold property to 3rd party?
> Contract of hire wasn’t automatically ended by sale.
>If interfered with conductor’s enjoyment - could sue for damages. But then could be evicted.
Letting and hiring - hire of a thing - duties of the locator
> Locator delivers property - along with accessories - to conductor’s detentio (not possession).
If property sold before expiry of hire then buyer’s agreement often secured not to interfere with conductor’s enjoyment.
Locator had to maintain maintain hired thing in good repair unless damaged by conductor’s negligence.
Conductor could recover expenses for undertaking reasonable maintenance of the property.
Locator = liable for damage caused by undisclosed defects which he was aware or should have been aware of.
Locator SoC = BF.
Letting and hiring - hire of a thing - duties of the conductor
> Accept delivery & pay in lump sum or instalments.
Security for rent could be agreed and was implied for land (as produce of land regarded as the security, the locator having a lien (hypotheca) on the crops.
Property’s character had to be preserved.
Couldn’t use in any unauthorised way.
BF SoC.
Return substantially in original state, save for wear and tear.
Allowing property to decrease in value could be seen as a breach of duty.
Loss: Risk of accidental/unpreventable loss was on locator.
Only partial loss: Tenant entitled to a rebate or a remission of rent if damage caused by exceptionally abnormal conditions, but not otherwise.
Letting and hiring - hire of a thing - duties of both parties
> Duties of both parties could be varied by agreement.
Remedies available for enforcement of duties:
-actio locati for locator
-actio conducti for conductor.
Measure of damages = P’s ‘interest’ in contract’s performance.
Tenants generally didn’t have proprietary interests in RL.
Letting and hiring - hire of services - overview
> Locatio conductio operarum.
Locator placed his services at the disposal of the conductor in return for payment.
BF SoC.
If locator professed a particular expertise, he had to prove competent for the work he undertook.
Conductor could be liable for failure to provide e.g. safe work premises/safe system of work.
Locator’s death ends contract.
Unless contract had been personal, conductor’s death ends contract.
