Casebook on the Roman Law of Contracts
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Casebook on the Roman Law of Contracts Chapter V: Other Consensual Contracts: Problems in Execution Beyond sale, the Urban Praetor’s Edict recognized three other “consensual” con- tracts: lease/hire (locatio conductio); partnership (societas); and mandate (mandatum). All three arise through agreement (consensus) alone, without any formality and without the start of performance by either or both parties. Further, all three, like sale, give rise to actions by both parties, and these actions are based on and governed by the concept of good faith, bona fides; this concept provides the jurists with leverage for the development of legal rights and duties. The four consensual contracts, taken together, are likely to have accounted for most commercial contracts in the Roman Empire, especially when they were supplemented by stipulation. On the other hand, significant problems remained. The bilateral contract of mandate, in particular, was gratuitous by definition but needed expansion in order to cover situations in which the mandatary acted on a broad commis- sion over an extended period of time (Chapter V.C, see also VII.C); and remaining gaps in the list of acceptable contracts had to be filled somehow (Chapter VI). None of this was conceptually easy. Beyond these jurisprudential problems, the contracts considered in this Chapter often raise an additional, very important difficulty. Sale archetypically involves a one-off transaction, a transfer of money in exchange for the transfer of an object of sale. However, many contracts (often, even sales) involve performance over a relatively prolonged period of time, during which one party may be—and very often is—extending credit to the other. Take the easy case of the tenant of a dwelling who, without legal justification, stops paying rent. The landlord obviously has available a legal action to collect the unpaid rent; this is a remedy at law. But legal mechanisms are often slow to work. In the meantime, and for the remainder of the lease term, is the landlord obliged to go on providing shelter to the tenant? It seems obvious that the answer is no, and that the landlord will also, in addition to the legal remedy of damages for unpaid rent, be able to expel the tenant from the dwelling—that is, to use nonpayment as a legal basis for ceasing performance of his or her own side of the contract, as a self-help remedy exercised outside the judicial system. Anglo-American law handles this type of informal self-help remedy through a the- ory of implied conditions: performance by one side becomes a legally implied condition for performance by the other. Conditions such as these can, of course, be express, as part of the contract. But more frequently they operate through implication, as part of a logical sequence of performance between the parties, justifying one party in suspending and ul- timately terminating performance because of a material failure in the other’s perfor- mance. Obviously, this is a tool that a party must use cautiously, since suspending or ter- minating performance may be a breach of contract in its own right if it is unjustified. The jurists never developed a generalized theory of material breach, one that is serious enough to justify the other party in suspending its performance, or even, in suffi- ciently extreme cases, in terminating the contract altogether. But although Roman law Chapter V: Other Consensual Contracts, page 2 appears to lack an explicit doctrine of implied conditions, and instead may treat them just as an aspect of bona fide rights and duties, juristic sources nonetheless, as we shall see, often do seem to recognize the underlying difficulty and, at least in some situations, to provide for it. Chapter V: Other Consensual Contracts, page 3 Part A: Lease/Hire (Locatio Conductio) Although the details are intricate, sale is a relatively simple contract: the exchange of money for an object of sale. By contrast, the contract of lease/hire (locatio conductio) is far more convoluted. The starting point is the Latin verb locare (“to put into position, to place”; see locus), which can be used to describe three quite different legal relation- ships: • a person can “place” an object with another who hires its use (l.c. rei); • a person can “place” a job that another party undertakes to perform (l.c. operis faciendi); or • a person can even “place” his or her own labor (l.c. operarum). The “placer” is then called the locator, while the other party is the “taker” or conductor, with a “fee” (merces) that passes between the parties depending on the economic sense of the transaction. Thus, a locator who leases out property–in common parlance, the lessor– receives a fee from the conductor–a lessee; a locator who hires out the performance of a job pays a fee to the conductor, who acts as what we would call a contractor; and a locator who hires out his own labor receives pay from the conductor, in an employment arrange- ment. This typology may help to suggest both the origin and ultimate limits of locatio conductio, but it has scant relevance to most juristic discussions of the sprawling contract. As sale is the exchange of an object, so locatio conductio involves the exchange of a per- formance for money; and a set “fee” (merces) for this performance is as crucial to locatio conductio as a set price (pretium) is to sale. Beyond this central rule, however, Roman legal sources all but ignore general problems in the contract of lease/hire. They focus, instead, on particular contractual “sub-types,” such as lease of a dwelling or a farm, the hire of objects or slaves, or the performance of a job by a building contractor, a trans- porter, or an artisan. Such contracts obviously have massive social and economic signifi- cance. For each contractual “sub-type,” the jurists concentrate on developing a set of dis- positive rules designed to govern the normal manner and standards for rendering perfor- mance, although the parties can usually vary these rules by express agreement. Since, un- like delivery in sale, a performance almost always takes place over a period of time, dis- putes may often arise between the two parties. Accordingly legal rules for performance must take account of an intricate balance of interests. Chapter V: Other Consensual Contracts, page 4 Section 1: Lease of a Dwelling Case 147: Grounds for Expelling the Tenant C. 4.65.3 (Imp. Antoninus A. Flavio Callimorpho) Diaetae, quam te conductam habere dicis, si pensionem domino insulae solvis, invitum te expelli non oportet, nisi propriis usibus dominus esse necessariam eam probaverit aut corrigere domum maluerit aut tu male in re locata versatus es. The Emperor Caracalla to Flavius Callimorphus (214 CE) If you pay to the building’s owner rent for the lodging that you claim you hold un- der lease, you should not be unwillingly expelled, except if the owner proves that it is required for his own use, or he wishes to repair the house, or you have behaved wrongly in the leasehold. The Problem: Under what circumstances can a landlord expel a tenant from an urban leasehold prior to the expiration of the lease? Discussion: 1. The Contract. The emperor’s rescript to Flavius Callimorphus (otherwise unknown) assumes that Flavius has a valid lease with the building’s owner and is already in residence. Rules for the formation of locatio conductio were said to bear a family resemblance to those for sale (Gaius, Inst. 3.142, 145; Justinian, Inst. 3.24 pr.-5); for instance, the parties must set a money “fee” (merces) that is comparable to the price in sale, although Ulpian accepts paying in kind (D. 19.2.19.3; also Gaius, D. 19.2.25.6: sharecropping). The merces must be real (Ulpian, D. 19.2.46, 41.2.10.2; Paul, D. 19.2.20.1), but need not be equivalent in value (Case 83). 2. Justifications for Expulsion. Caracalla lists four grounds that, as it appears, would justify Flavius being expelled from his lodging before the lease term ends: 1) the tenant’s failure to pay rent in a timely fashion; 2) the building owner’s personal need for the lodging; 3) the owner’s wish to repair the house; and 4) the tenant’s misbehavior in the lodging. The first and fourth of these reasons are, as it seems, in the nature of implied conditions imposing duties on the tenant, with violation justifying expulsion and thus allowing the owner to cease performance under the contract. Timely payment of rent is a fairly obvious duty; see also Paul, D. 19.2.54.1, and Hermogenianus, D. 39.4.10.1 (both of a tenant farmer), and the following Case. Tenant miscon- duct is much less easy to understand, although other legal sources show particularly intense con- cern about the peril of city fires (e.g., Ulpian, D. 1.15.3.3-4 and 4), a danger about which tenants were at times expressly cautioned (Ulpian, D. 19.2.11.1). It is unclear what sorts of lesser miscon- duct might lead to justified expulsion. Possibly serious damage to the leasehold? “Immoral or illegal conduct”? “Disorderly conduct”? What is interesting is that these two reasons are blended with two others that do not rep- resent tenant conduct, but instead the owner’s permissible desires within the contract: either his wish to rehabilitate the building (see also Alfenus, D. 19.2.30 pr., and Africanus/Servius, D. 19.2.35 pr.), or his needing the leasehold for his own use. Does it seem right to you that the tenant should have to bear the risk of such things? Would the landlord have to be acting reasonably, according to an objective test? The mixture, in any case, strongly indicates that the Romans are Chapter V: Other Consensual Contracts, page 5 not thinking in terms of the reciprocal contractual rights and duties of the two parties, but rather of what sorts of events might trigger the contract being justifiably terminated by the owner.