CHAPTER VI. CONTRACTS. A CONTRACT is a mutual promise. The obligation therefore of contracts, the sense in which they are to be interpreted, and the cases where they are not binding, will be the same as of promises. It has long been controverted amongst moralists, whether promises be binding, which are extorted by violence or fear. The obligation of all promises results, we have seen, from the necessity or the use of that confidence which mankind repose in them. The question, therefore, whether these promises are binding, will depend upon this; whether mankind, upon the whole, are benefited by the confidence placed on such promises? A highwayman attacks From the principle established in the last you and being disappointed of his booty, chapter, "that the obligation of promises is to threatens or prepares to murder you;-you pro- be measured by the expectation which the promise, with many solemn asseverations, that if miser any how voluntarily and knowingly exhe will spare your life, he shall find a purse of cites," results a rule, which governs the conmoney left for him, at a place appointed;-up-struction of all contracts, and is capable, from on the faith of this promise, he forbears from its simplicity, of being applied with great ease further violence. Now, your life was saved by and certainty, viz. That the confidence reposed in a promise extorted by fear; and the lives of many others may be saved by the same. This is a good consequence. On the other hand, confidence in promises like these, greatly facilitates the perpetration of robberies: they may be made the instruments of almost unlimited extortion. This is a bad consequence: and in the question between the importance of these opposite consequences, resides the doubt concerning the obligations of such promises. There are other cases which are plainer; as where a magistrate confines a disturber of the public peace in jail, till he promise to behave better; or a prisoner of war promises, if set at liberty, to return within a certain time. These promises, say moralists, are binding, because the violence or duress is just; but, the truth is, because there is the same use of confidence in these promises, as of confidence in the promises of a person at perfect liberty. wure of stated Vows are promises to God. The obligation cannot be made out upon the same principle as that of other promises. The violation of them, nevertheless, implies a want of reverence to the Supreme Being; which is enough to make it sinful. There appears no command or encouragement in the Christian Scriptures to make vows; much less any authority to break through them when they are made. The few instances of vows which we read of in the New Testament, were religiously observed. The rules we have laid down concerning promises, are applicable to vows. Thus Jephtha's vow, taken in the sense in which that transaction is commonly understood, was not binding; because the performance, in that contingency, became unlawful. Acts xviii. 18. xxi. 23. Whatever is expected by one side, and known to be so expected by the other, is to be deemed a part or condition of the contract. The several kinds of contracts, and the order in which we propose to consider them, may be exhibited at one view, thus Contracts of Sale. Inconsumable Property Service. Commissions. Lending of Labour. Partnership. CHAPTER VII. CONTRACTS OF SALE. THE rule of justice, which wants with most anxiety to be inculcated in the making of bargains, is, that the seller is bound in conscience to disclose the faults of what he offers to sale. Amongst other methods of proving this, one may be the following: I suppose it will be allowed, that to advance a direct falsehood, in recommendation of our wares, by ascribing to them some quality which we know that they have not, is dishonest. Now compare with this the designed concealment of some fault, which we know that they have. The motives and the effects of actions are the only points of comparison, in which their moral quality can differ: but the motive in these two cases is the same, viz. to procure a higher price than we expect otherwise to obtain: the effect, that is, the prejudice to the buyer, is also the same; for he finds himself equally out of pocket by his bargain, whether the commodity, when he gets home with it, turn out worse than he had supposed, by the want of some quality which he expected, or the discovery of some fault which he did not | part of the contract between them, though not expect. If therefore actions be the same, as a syllable be said about it. The breach of this o all moral purposes, which proceed from the implied contract constitutes the fraud inquired same motives, and produce the same effects; it after. is making a distinction without a difference, to esteem it a cheat to magnify beyond the truth the virtues of what we have to sell, but none to conceal its faults. Hence, if you disclaim any such engagement, you may set what value you please upon your property. If, upon being asked to sell a house, you answer that the house suits your It adds to the value of this kind of honesty, fancy or conveniency, and that you will not that the faults of many things are of a nature turn yourself out of it, under such a price; the not to be known by any, but by the persons price fixed may be double of what the house who have used them; so that the buyer has cost, or would fetch at a public sale, without no security from imposition, but in the inge-any imputation of injustice or extortion upon nuousness and integrity of the seller. There is one exception however to this rule; namely, where the silence of the seller implies some fault in the thing to be sold, and where the buyer has a compensation in the price for the risk which he runs: as where a horse, in a London repository, is sold by public auction, without warranty; the want of warranty is notice of some unsoundness, and produces a proportionable abatement in the price. you. If the thing sold, be damaged, or perish, between the sale and the delivery, ought the buyer to bear the loss, or the seller? This will depend upon the particular construction of the contract. If the seller, either expressly, or by implication, or by custom, engage to deliver the goods; as if I buy a set of china, and the china-man ask me to what place he shall bring or send them, and they be broken in the conTo this of concealing the faults of what we veyance, the seller must abide by the loss. If want to put off, may be referred the practice the thing sold, remain with the seller, at the of passing bad money. This practice we some-instance, or for the conveniency of the buyer, times hear defended by a vulgar excuse, that then the buyer undertakes the risk; as if I we have taken the money for good, and must buy a horse, and mention, that I will send for therefore get rid of it. Which excuse is much it on such a day (which is in effect desiring the same as if one, who had been robbed upon that it may continue with the seller till I do the highway, should allege that he had a right send for it,) then, whatever misfortune befalls to reimburse himself out of the pocket of the the horse in the mean time, must be at my first traveller he met; the justice of which cost. reasoning, the traveller possibly may not com And here, once for all, I would observe, that prehend. innumerable questions of this sort are deterWhere there exists no monopoly or combi-mined solely by custom; not that custom posnation, the market-price is always a fair price; because it will always be proportionable to the use and scarcity of the article. Hence, there need be no scruple about demanding or taking the market-price; and all those expressions, "provisions are extravagantly dear," corn bears an unreasonable price," and the like, import no unfairness or unreasonableness in the seller. 99.66 sesses any proper authority to alter or ascertain the nature of right and wrong; but be cause the contracting parties are presumed to include in their stipulation, all the conditions which custom has annexed to contracts of the same sort: and when the usage is notorious, and no exception made to it, this presumption is generally agreeable to the fact". If I order a pipe of port from a wine-merchant abroad; at what period the property passes from the merchant to me; whether upon delivery of the wine at the merchant's warehouse; upon its being put on shipboard at Oporto; upon the arrival of the ship in England; at its destined port; or not till the wine be committed to my servants, or deposited in my cellar; are all questions which admit of no decision, but what custom points out. Whence, in justice, as well as law, what is called the custom of merchants, regulates the construction of mercantile concerns. If your tailor or your draper charge, or even ask of you, more for a suit of clothes, than the market-price, you complain that you are imposed upon; you pronounce the tradesman who makes such a charge, dishonest; although, as the man's goods were his own, and he had a right to prescribe the terms upon which he would consent to part with them, it may be questioned what dishonesty there can be in the case, or wherein the imposition consists. Whoever opens a shop, or in any manner exposes goods to public sale, virtually engages to deal with his customers at a market-price; because it is upon the faith and opinion of such an enIt happens here, as in many cases, that what the gagement, that any one comes within his shop-parties ought to do, and what a judge or arbitrator would doors, or offers to treat with him. This is ex-ties ought to do by virtue of their contract, depends upaward to be done, may be very different. What the parpected by the buyer; is known to be so ex-on their consciousness at the time of making it; wherepected by the seller; which is enough, accord- as a third person finds it necessary to found his judgment upon presumptions, which presumptions may be false, ing to the rule delivered above, to make it a although the most probable that he could proceed bv. MORAL AND POLITICAL PHILOSOPHY. CHAPTER VIII. CONTRACTS OF HAZARD. By Contracts of Hazard, I mean gaming What some say of this kind of contracts, suspect, when he proposed or accepted the wa ger. In speculations in trade, or in the stocks, if I exercise my judgment upon the general as pect and prospect of public affairs, and deal with a person who conducts himself by the the equality in it which is necessary: but if I same sort of judgment; the contract has all private advice of some decisive measure or event have access to secrets of state at home, or abroad, I cannot avail myself of these advan tages with justice, because they are excluded by the contract, which proceeded upon the supposition that I had no such advantage. computes his risk entirely from the account given by the person insured, it is absolutely In insurances, in which the underwriter necessary to the justice and validity of the contract, that this account be exact and complete. CHAPTER IX. CONTRACTS OF LENDING OF INCONSUM- as a book, a horse, a harpsichord, it is called WHEN the identical loan is to be returned, ney, and those things which perish, or are partinconsumable; in opposition to corn, wine, moed with, in the use, and can therefore only be restored in kind. The proper restriction is, that neither side have an advantage by means of which the other is not aware; for this is an advantage taken, without being given. Although the event be still an uncertainty, your advantage simple. The first is, if the thing lent be lost in the chance has a certain value; and so much or damaged, who ought to bear the loss or daThe questions under this head are few and of the stake, as that value amounts to, is taken mage? If it be damaged by the use, or by acfrom your adversary without his knowledge, cident in the use, for which it was lent, the and therefore without his consent. down to a game at whist, and have an advan- coach, the wear, tear, and soiling of the coach, If I sit lender ought to bear it; as if I hire a jobtage over the adversary, by means of a better must belong to the lender; or a horse, to go memory, closer attention, or a superior know- a particular journey, and in going the proposledge of the rules and chances of the game, ed journey, the horse die, or be lamed, the loss the advantage is fair; because it is obtained must be the lender's: on the contrary, if the by means of which the adversary is aware: for damage be occasioned by the fault of the borhe is aware, when he sits down with me, that rower, or by accident in some use for which it I shall exert the skill that I possess to the ut- was not lent, then the borrower must make it most. But if I gain an advantage by packing good; as if the coach be overturned or broken the cards, glancing my eye into the adver- to pieces by the carelessness of your coachman ; saries' hands, or by concerted signals with my or the horse be hired to take a morning's ride partner, it is a dishonest advantage; because upon, and you go a-hunting with him, or leap it depends upon means which the adversary him over hedges, or put him into your cart or never suspects that I make use of. ed, or accidentally hurt, or drop down dead, carriage, and he be strained, or staked, or gallsatisfaction to the owner. whilst you are thus using him; you must make The same distinction holds of all contracts into which chance enters. a horse-race, founded upon the conjecture I If I lay a wager at form from the appearance, and character, and breed, of the horses, I am justly entitled to any advantage which my judgment gives me : but, if I carry on a clandestine correspondence with the jockeys, and find out from them, that a trial has been actually made, or that it is settled beforehand which horse shall win the race; all such information is so much fraud, because derived from sources which the other did not cumstance: that in one case, the owner fore- during the term of a lease, be so increased or arose from a passage in the law of Moses, Deuteronomy, xxiii. 19, 20: "Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury: unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury." This prohibition is now generally understood to have been intended for the Jews alone, as part of the civil or political law of that nation, and calculated to preserve amongst themmany of their institutions were subservient ; as the marriage of an heiress within her own tribe; of a widow who was left childless, to her husband's brother; the year of jubilee, when alienated estates reverted to the family of the original proprietor:-regulations which were never thought to be binding upon any but the commonwealth of Israel. may be doubted, to whom, of natural right, the advantage or disadvantage belongs. The rule of justice seems to be this: If the alteration might be expected by the parties, the hirer must take the consequence; if it could not, the owner. An orchard, or a vineyard, or a mine, or a fishery, or a decoy, may this year yield nothing, or next to nothing, yet the tenant shall pay his rent; and if they next year produce tenfold the usual profit, no more shall be demanded; because the produce is in its nature precarious, and this variation might be expect-selves that distribution of property, to which ed. If an estate in the fens of Lincolnshire, or the isle of Ely, be overflowed with water, so as to be incapable of occupation, the tenant, notwithstanding, is bound by his lease; because he entered into it with a knowledge and foresight of the danger. On the other hand, if, by the irruption of the sea into a country where it was never known to have come before, by the change of the course of a river, the This interpretation is confirmed, I think, fall of a rock, the breaking out of a volcano, beyond all controversy, by the distinction made the bursting of a moss, the incursions of an in the law, between a Jew and a foreigner :— enemy, or by a mortal contagion amongst the" unto a stranger thou mayest lend upon usucattle; if, by means like these, an estate change ry, but unto thy brother thou mayest not lend or lose its value, the loss shall fall upon the upon usury;" a distinction which could hardowner; that is, the tenant shall either be dis-ly have been admitted into a law, which the charged from his agreement, or be entitled to Divine Author intended to be of moral and of an abatement of rent. A house in London, by universal obligation. the building of a bridge, the opening of a new road or street, may become of ten times its former value; and, by contrary causes, may be as much reduced in value: here also, as before, the owner, not the hirer, shall be affected by the alteration. The reason upon which our determination proceeds is this; that changes such as these, being neither foreseen, nor provided for, by the contracting parties, form no part or condition of the contract; and therefore ought to have the same effect as if no contract at all had been made (for none was made with respect to them), that is, ought to fall upon the owner. CHAPTER X. CONTRACTS CONCERNING THE LENDING OF MONEY. The rate of interest has in most countries been regulated by law. The Roman law allowed of twelve pounds per cent., which Jus. tinian reduced at one stroke to four pounds. A statute of the thirteenth year of Queen Elizabeth, which was the first that tolerated the receiving of interest in England at all, restrained it to ten pounds per cent.; a statute of James the First, to eight pounds; of Charles the Second, to six pounds; of Queen Anne, to five pounds, on pain of forfeiture of treble the value of the money lent: at which rate and penalty the matter now stands. The policy of these regulations is, to check the power of accumulating wealth without industry; to give encouragement to trade, by enabling adventurers in it to borrow money at a moderate price; and of late years, to enable the state to borrow the subject's money itself. Compound interest, though forbidden by the law of England, is agreeable enough to natu THERE exists no reason in the law of na-ral equity; for interest detained after it is due, ture, why a man should not be paid for the becomes, to all intents and purposes, part of lending of his money, as well as of any other the sum lent. property into which the money might be converted. It is a question which sometimes occurs, how money borrowed in one country ought to be The scruples that have been entertained up-paid in another, where the relative value of the on this head, and upon the foundation of which, the receiving of interest or usury (for they formerly meant the same thing) was once prohibited in almost all Christian countries By a statute of JAMES the First, interest above eight pounds per cent. was prohibited, (and consequently under that rate allowed,) with this sage provision: That this statute shall not be construed or expounded to allow the Practice of usury in point of relixion or conscience precious metals is not the same. For example, suppose I borrow a hundred guineas in Lon don, where each guinea is worth one-and-twenty shillings, and meet my creditor in the East Indies where a guinea is worth no more perhaps than nineteen; is it a satisfaction of the debt to return a hundred guineas, or must I make up so many times one-and-twenty shil. lings? I should think the latter; for it must E be presumed, that my creditor, had he not lent | flicted, will be apparent. There are frauds reme his guineas, would have disposed of them lating to insolvency, against which it is as in such a manner, as to have now had, in the necessary to provide punishment, as for any place of them, so many one-and-twenty shil- public crimes whatever: as where a man gets lings; and the question supposes that he nei- your money into his possession, and forthwith ther intended, nor ought to be a sufferer, by runs away with it; or, what is little better, parting with the possession of his money to me. squanders it in vicious expenses; or stakes it When the relative value of coin is altered at the gaming-table; in the Alley; or upon by an act of the state, if the alteration would wild adventures in trade; or is conscious at have extended to the identical pieces which the time he borrows it, that he can never repay were lent, it is enough to return an equal num- it; or wilfully puts it out of his power, by prober of pieces of the same denomination, or their fuse living; or conceals his effects, or transfers present value in any other. As, if guineas them by collusion to another: not to mention were reduced by act of parliament to twen- the obstinacy of some debtors, who had rather ty shillings, so many twenty shillings, as I bor- rot in a gaol, than deliver up their estates; for, rowed guineas, would be a just repayment It to say the truth, the first absurdity is in the would be otherwise, if the reduction was ow-law itself, which leaves it in a debtor's power ing to a debasement of the coin; for then respect ought to be had to the comparative value of the old guinea and the new. Whoever borrows money, is bound in conscience to repay it. This, every man can see; but every man cannot see, or does not however reflect, that he is, in consequence, also bound to use the means necessary to enable himself to repay it. "If he pay the money when he has it, or has it to spare, he does all that an honest man can do," and all, he imagines, that. is required of him; whilst the previous measures, which are necessary to furnish him with that money, he makes no part of his care, nor observes to be as much his duty as the other; such as selling a family. seat or a family estate, contracting his plan of expense, laying down his equipage, reducing the number of his servants, or any of those humiliating sacrifices, which justice requires of a man in debt, the moment he perceives that he has no reasonable prospect of paying his debts without them. An expectation which depends upon the continuance of his own life, will not satisfy an honest man, if a better provision be in his power; for it is a breach of faith to subject a creditor, when we can help it, to the risk of our life, be the event what it will; that not being the security to which credit was given. I know few subjects which have been more misunderstood, than the law which authorises the imprisonment of insolvent debtors. It has been represented as a gratuitous cruelty, which contributed nothing to the reparation of the creditor's loss, or to the advantage of the community. This prejudice arises principally from considering the sending of a debtor to gaol, as an act of private satisfaction to the creditor, instead of a public punishment. As an act of satisfaction or revenge, it is always wrong in the motive, and often intemperate and undistinguishing in the exercise. Consider it as a public punishment; founded upon the same reason, and subject to the same rules, as other punishments; and the justice of it, together with the degree to which it should be extended, and the objects upon whom it may be in to withhold any part of his property from the claim of his creditors. The only question is, whether the punishment be properly placed in the hands of an exasperated creditor: for which it may be said, that these frauds are so subtile and versatile, that nothing but a discretionary power can overtake them; and that no discretion is likely to be so well informed, so vigilant, or so active, as that of the creditor. It must be remembered, however, that the confinement of a debtor in a jail is a punishment; and that every punishment supposes a crime. To pursue, therefore, with the extremity of legal rigour, a sufferer, whom the fraud or failure of others, his own want of capacity, or the disappointments and miscarriages to which all human affairs are subject, have reduced to ruin, merely because we are provoked by our loss, and seek to relieve the pain we feel by that which we inflict, is repugnant not only to humanity, but to justice: for it is to pervert a provision of law, designed for a different and a salutary purpose, to the gratification of private spleen and resentment. Any alteration in these laws, which could distinguish the degrees of guilt, or convert the service of the insolvent debtor to some public profit, might be an improvement; but any considerable mitigation of their rigour, under colour of relieving the poor, would increase their hardships. For whatever deprives the creditor of his power of coercion, deprives him of his security; and as this must add greatly to the difficulty of obtaining credit, the poor, especially the lower sort of tradesmen, are the first who would suffer by such a regulation. As tradesmen must buy before they sell, you would exclude from trade two thirds of those who now carry it on, if none were enabled to enter into it without a capital sufficient for prompt payments. Ar advocate, therefore, for the interests of this important class of the community, will deem it more eligible, that one out of a thousand should be sent to jail by his creditors, than that the nine hundred and ninety-nine should be straitened and embarrassed, and many of them lie idle by the want of credit. |