Section — Koch–Preuss
Section 4: The So-Called Gratuitous Contracts
Gratuitous contracts, so called, are: promises, gifts, deposits, loans, and the agreements known in Latin as mutua, for which we have no precise equivalent in English.
- A promise (promissio) is merely a free and sincere declaration of one’s willingness to do something gratuitously for another. It is, therefore, not strictly a contract, but rather a preliminary to a contract. English law will not enforce a simple promise for which no valuable consideration was given and which was not entered into by deed,1 but in the forum of conscience a promise imposes an obligation, either of fidelity or of justice, as the intention may be.
1 T. Slater, S. J., A Manual of Moral Theology, Vol. I, p. 496.
“There is a dispute among theologians concerning the kind and quality of the obligation imposed by a simple promise. An onerous promise for which consideration is given by the other party, and mutual promises bind in justice, and consequently under pain of grievous sin in serious matter. Similarly, where the promisee has been led to rely on a promise, and would suffer serious loss unless the promise were fulfilled, the promisor will be under a grave obligation to fulfil it. Apart from these circumstances the obligation of a simple promise will depend on the intention of the promisor. If he intended to give the promisee a strict right to what was promised, he will be bound in justice; otherwise he will only be bound by the virtue of fidelity, which is a self-regarding virtue, and imposes an obligation to make the fact agree with one’s word. The virtue of fidelity of itself only binds under pain of venial sin. A promise will cease to bind if some event takes place or becomes known subsequently which would have prevented the promisor from making the promise if it had happened or been known beforehand. For a simple promise is essentially conditional; the promisor binds himself to do something under certain suppositions and in certain circumstances; if those suppositions are not verified, or if the circumstances become changed, the promise no longer obliges. All the more will a promise cease to bind if what was promised becomes unlawful and wrong, or useless, or impossible.”2
2 Op. cit., p. 497. Cfr. M. Cronin, The Science of Ethics, Vol. II, p. 313.
- A gift (donatio) is a contract by which a man (donator) gratuitously transfers an object or a right to another (donatarius). For a gift to be valid, the donor must be free to give away the object or right in question, and the receiver (donatarius) must be free to accept it. A gift is called inter vivos if the ownership in the property is transferred by the donor while he is still alive; it is called mortis causa if made in view of death, i. e., with the intention that the donatarius shall receive the property only after the donor’s demise.3 The difference between these two kinds of gifts lies in this, that a donatio mortis causa may be revoked at any time, and becomes void with or without a cause, if the donatarius dies before the donor, unless indeed the latter expressly ordained the contrary. A donatio inter vivos, on the contrary, can be voided only for definite reasons determined by law, e. g., if an heir is born to the donor, if the beneficiary proves grossly ungrateful, or if the donor becomes poor and needy without any fault of his.4 Gifts of immovable objects or movable ones of considerable value must be legally approved to be valid. Catholic Moral Theology demands of the donor that he shall not injure his family or creditors nor give his property away to unworthy persons in order to gratify his own passion or that of another; and of the beneficiary, that he shall not obtain a gift by deception, intrigue, or other undue influence, that he shall refuse to accept a donation unjustly made, and that he shall show himself duly grateful for gifts, both in word and deed.5 The civil law may add other conditions, for instance, that there should be some public record of the transaction.
3 J. P. Gury, S. J., Comp. Theol. Mor., Vol. I, n. 761: “A donation in general is the gratuitous grant of some thing. It can be made in two principal ways, namely, between the living and by testament.” Ibid., n. 770: “A donation between the living is an act or contract by which the donor actually and irrevocably deprives himself of some thing in favor of the accepting donee.” Ibid., n. 797: “A donation in contemplation of death is one which is made in view of death; it is necessarily revocable by its nature. This concerns the common law. A donation in contemplation of death is valid, provided it is clothed with the due conditions, namely: 1. It must be made in view of death, otherwise it would be considered a donation between the living; 2. It must be accepted before the donor’s death by the donee himself; 3. If the donee predeceases the donor, it is revoked by that very fact and does not pass to his heirs.”
4 Gury, ibid., I, n. 773; Göpfert, Moraltheol., Vol. I, pp. 162 sqq.
5 Col. III, 15; 1 Thess. V, 18; 1 Tim. II, 1; cfr. Prov. XVII, 13.—J. E. Ross, Christian Ethics, p. 300.
In most countries gifts are hedged about with many legal provisions intended, first, to exclude undue influences and, second, to prevent donations to persons and institutions which the State does not wish to be so favored. When the lawmakers really have in view the common welfare, these limitations are wholesome. There may be undue weakness shown in giving and there are always persons ready to exploit such a defect of character for their own benefit. In view of this fact the public authorities have a right to protect the weak in their property and to limit extravagance in the form of immoderate and unjust giving. Take the case of a man who disinherits his wife and children and leaves his property to a concubine. Here surely the law ought to interfere. Christian moral teaching, therefore, obliges us to respect the civil laws in this regard. No gift should be made except for some adequate reason, and the beneficiary should realize that he assumes certain obligations with the gift.6
6 Linsenmann, Moraltheol., pp. 548 sq.
- A deposit is a contract by which a man (deponens) entrusts to another (depositarius) an object (depositum), to be guarded for him until he demands it back.7
7 Gury, Comp. Theol. Mor., Vol. I, n. 806: “A con- tract by which a thing is entrusted and accepted for safekeeping, to be restored intact whenever the depositor wishes.”
a) The depositary is bound in conscience to take reasonable care of the object entrusted to him. He is not allowed to make use of it or to appropriate its fruits; he must return the object to its lawful owner upon demand, and make restitution for any damage or injury it may have suffered ex dolo et culpâ latâ seu levi while in his care. If the object entrusted has decreased in value by accident, the depositary is not responsible for the damage, for “casum sentit dominus.” If the damage was done through his fault, the question of indemnification must be decided by the terms of the contract. If there was no definite agreement, the depositary is responsible not only for grave neglect on his own part, but also for moderate neglect, provided he receives some compensation for the custody of the object or has freely offered his services. If he has used the entrusted object without the owner’s permission, he is responsible for all damage or depreciation, even though it may have occurred accidentally. If the deposit turns out to be ill-gotten, or the depositary has a just claim against the owner, or reason to fear that the owner will abuse the object, he is not bound to give it back.8
8 St. Ambrose, De Offic., l. II, c. 29, n. 149: “Faith with respect to deposits must be kept; diligence must be employed.” (Migne, P. L., XVI, 143).—Gury, Comp. Theol. Mor., Vol. I, n. 806: “Obligations of the depositary: 1. He is bound to keep and guard the deposited thing with the care and diligence which diligent men are accustomed to employ in preserving a similar thing of their own; for he has undertaken custody of the thing handed over. If the deposited thing perishes through fraud or through his theologically culpable negligence, he is bound to restitution; 2. He may exact nothing for custody of the thing, unless the owner has expressly promised him compensation, because a pure deposit redounds to the advantage of the depositor alone. But if an agreement concerning compensation has intervened, the deposit then passes into a hiring of service, namely, for the safekeeping of the deposited thing; 3. He is forbidden to use the deposited thing without the owner’s express or tacit consent, or at least consent prudently presumed, for it is not lawful to use another’s thing without consulting the owner; 4. He is bound immediately to return the deposited thing to the person requesting it, for otherwise he would possess another’s thing against the reasonable will of its owner. Except when the depositor requests it to his own or another’s injury, or when the thing is stolen and its owner requests it, or also when the depositary has a just cause for compensation. The deposited thing must be returned in the state in which it is found at the time of restitution, together with the fruits received from it. If, however, it has deteriorated through the fault of the depositary, he is bound to repair the damage.”
When a deposited object (depositum) must be restored to its owner, depends upon the will of the latter, even in those cases where a time limit is fixed in the contract, because the nature of this sort of contract makes it necessary to interpret its provisions in favor of the owner. If the place to which the object is to be returned is determined in the contract, this stipulation should be observed by the depositary, but the depositor must pay the costs of transportation. If the depositary changes his place of residence, he is not bound to take the deposit with him, but may leave it in custody of a court, if the depositor will not send for it after being duly notified, or he may, in this latter case, take the object along with him at the expense of the owner.
b) The duties of the deponens or lender flow from the nature of the contract. He is above all obligated to receive back the deposit when the depositary wishes to return it for some good reason, for instance, because he can no longer keep it without danger to himself. When a compensation has been agreed upon between the parties, the owner need not pay it in full if the object is returned before the term agreed upon in the contract, but may make reasonable deductions, and eventually charge the depositary with the cost of entrusting the object to another. But he must indemnify the depositary for all necessary expenses incurred and for whatever damage the latter may suffer through the keeping, preservation, or rescue of the deposit, and likewise for accidental damage. In case of danger the depositary may save his own property first.
c) A special kind of deposit is sequestration, which is defined as the deposit of property made with a third person either by agreement (sequestrum conventionale) or by judicial order (s. iudiciarium), by parties having claims against such property, till the question of ownership can be decided. The person with whom such property is deposited is called sequester, umpire, or referee. Sequestration is an act of public administration. If sequestration is the result of a mutual agreement between the parties concerned, it may be either gratuitous or not; in the last-mentioned case, the consideration to be paid the sequester should be determined by the terms of the contract. If it is gratuitous, it is subject to the same rules as a deposit and is not rescinded except by mutual consent of the parties or by a legal action. In judicial sequestration the referee or umpire is bound to take good care of the property entrusted to him and the claimants must pay him the fee fixed by law.9
9 Gury, Comp. Theol. Mor., Vol. I, n. 807: “Sequestration is a species of deposit by which a disputed thing is deposited with a third party, so that after the judgment of a judge or arbitrator it may be handed over to the victor. A twofold sequestration is distinguished: conventional, which is made by the mutual agreement of the contending parties, and judicial, which is decreed by the judgment of a judge. It will suffice to indicate the following concerning both: 1. The object of both conventional and judicial sequestration can be movable or immovable property; 2. Conventional sequestration can be non-gratuitous, and then it is a hiring of service and is subject to the laws of that contract. But if it is gratuitous, it is subject to the same rules as a deposit. It is not dissolved, however, unless mutual consent of the parties or a legal cause supervenes; 3. In judicial sequestration the custodian must exercise the care of a good head of a household, while the person committing the thing to custody is bound to pay the depositary the compensation established by law. Thus concerning natural and positive law.”
Deposits now-a-days are mostly entrusted to banks. If a deposit consists of stocks or bonds or other valuable papers, the bank is per se not allowed to sell them or use them as collateral, particularly when there is danger that the owner may sustain losses through such action. Deposited money may, however, be loaned out or invested with due precautions, provided the owner is given adequate guarantees that he can withdraw his funds within a reasonable time after giving notice.
If a deposit is in danger, and the same danger threatens the depositary’s own property, the latter may rescue his own property first. If the deposit is much more valuable than one’s own property, it must be rescued first and indemnification can be claimed for one’s own loss. If however, the terms of the contract favor the depositary, he must rescue the property of the owner without claim to indemnification.
The same rule applies to loan contracts, with this modification that the terms of such contracts are always supposed to favor the borrower, who therefore has a greater responsibility.10
10 Göpfert, Moraltheologie, Vol. II, p. 166.—Cfr. St. Alphonsus, Theol. Mor., l. III, n. 752 (ed. Gaudé, II, 200).
A somewhat different sort of contract is that entered into by a guest who entrusts his valuables to a hotel or innkeeper. In most countries the civil law obliges the hotel keeper to take good care of the valuables entrusted to him and compels him to make restitution even in some cases where the natural law does not impose this obligation.11
11 J. Schwane, Die theol. Lehre über die Verträge, p. 79; V. Cathrein, S. J., Moralphilosophie, Vol. II, 4th ed., p. 348.
- A loan (commodatum) is a contract by which something is granted to another for his temporary use, on condition that it be restored to the owner in its integrity after the term specified.
If the contract contains a clause stipulating that the object loaned may be demanded back by the owner at any time, it is called precarium.
In making a contract of this kind the lender (commodans) must reveal the defects of the object or commodity loaned; he is not allowed to shorten the term of the contract arbitrarily, and must defray extraordinary expenses and losses caused by accidents.
The person to whom a commodity is loaned for use only, not for consumption, is called commodatarius. He is in duty bound to take good care of the commodity; he may not use it in a manner opposed to the terms of the contract; he has no right to lend it to others, and is responsible for the loss occasioned by its use or preservation, for instance, the feed of a horse or cow; he must further repair all damage arising to the object entrusted to him through his own fault, even though his fault be of the slightest (ex culpa levissima).12
12 Gury, Comp. Theol. Mor., Vol. I, n. 803: “A loan for use is a contract by which a thing is granted gratuitously for use alone for a fixed time, with the obligation of restoring the same thing in its individual form. A precarium, which is akin to a loan for use, is defined as: A contract by which the use of some thing, revocable at the grantor’s will, is granted to someone requesting it. A precarium differs, however, from a loan for use in that it is revocable at the grantor’s discretion.”—Cfr. Schwane, op. cit., pp. 79 sqq.; Göpfert, Vol. II, p. 165.
Lending to others an object which we expect to have restored to us in kind, is a practice which gives rise to much dissatisfaction and quarrelling, and therefore it is undoubtedly an indication of economic progress that objects which used to be loaned gratuitously are now sold or rented at a reasonable price. In trying to abolish the loan in favor of the lease or sales contract, says Bishop Linsenmann, we no more mean to discourage acts of charity than when we advocate the practice of furnishing the poor with occasions for work rather than doling out alms to them. Lending in the sense of the Scholastic commodatum will perhaps never die out as a form of friendship and good nature among neighbors; as a social function in the strict sense it no longer has importance except in the form practiced by public institutions, e. g., libraries, art collections, etc. Here, too, the original character of the contract as a kind of charity is almost completely obliterated. There is nothing in the nature of the loan contract which would prevent charging a fee for the use of books in a public library, nor is there anything unreasonable in the demand that the lender be held responsible for damage done by accident or by force majeure, to articles loaned to him, provided, of course, he is aware of his liability.13
13 Linsenmann, Lehrbuch der Moraltheol., pp. 551 sq.
- We now come to the contract that was called mutuum in Roman and Canon Law. It was a gratuitous loan of a fungible commodity made on condition that after a certain period of time the borrower (mutuatarius, debitor) should restore to the lender (mutuans sive mutuator vel creditor) an equal quantity of the commodity and of the same quality. A fungible commodity is one intended for immediate consumption, e. g., food and drink. Such commodities are called fungible (res fungibiles sive primo usu consumptibiles) because any amount of them is interchangeable with the same quantity and quality of the same commodity (mutuâ vice funguntur). Since use and consumption cannot be separated in such commodities, that is to say, since the commodity loaned is a res infructuosa or sterile, no more can justly be exacted in return than was originally lent.14
14 T. Slater, S. J., Manual of Moral Theology, Vol. I, p. 512;—J. E. Ross, C. S. P., Christian Ethics, p. 303.—J. P. Gury, op. cit., Vol. I, n. 810: "A loan for consumption is a contract by which a thing consumable by its first use is handed over to another under the obligation of returning at the appointed time a similar thing of the same kind and quality. Hence a loan for consumption differs from a loan for use, hire, and deposit: 1. Because in a loan for consumption the thing must be consumable by its first use, whereas not so in the others; 2. Because it must be returned not as the same individual thing, but only as the same in kind; 3. Because in a loan for consumption ownership of the thing is transferred, but not in the others; 4. Because in a loan for consumption the thing perishes to the receiver, in the others to the giver."
"Money considered as a medium of exchange is a fungible; it is a commodity whose use is exhausted for the owner of it when he has paid it in exchange for value received. It is not, under this respect, a commodity which is susceptible of repeated use by the same owner. Money then may be the matter of a contract of loan for consumption, and if a sum of money be thus lent, justice requires that an equal sum be returned at the end of the term, and justice will not allow a greater sum to be exacted in return. For the whole value of the sum of money is the value it has for making exchanges, the value which it has in the first expenditure of it; and if, over and above the sum lent, a further sum were demanded for the use of the money, the same thing would be charged for twice over. An equal sum is due in return for the use of the money; a further sum would be a second payment for the same use. Thus when money is regarded merely as a medium of exchange, a sin against justice is committed if an additional sum is exacted for a loan; it is called usury, money unduly exacted for the use of money. This is the reasoning of Aquinas,15 and it seems as cogent to-day as it was in the thirteenth century." 16 By this argument St. Thomas defended the doctrine concerning usury which the Fathers and Doctors had drawn from Holy Scripture and tradition. Benedict XIV sums up the constant teaching of the Church on usury as follows: "The species of sin which is called usury, and which has its proper seat and place in the contract called mutuum, consists in this that, from a loan made for consumption (which of its own nature requires that only so much should be returned as was received), the lender desires more to be returned to him than was received, and therefore contends that some gain, over and above the principal, is due him merely on account of the loan. ... Every sort of gain of this kind, therefore, which exceeds the loan, is illicit and usurious.17 " 17 It can be shown, however, that money is no longer a mere means of exchange for articles of consumption and a measure of their value, but by its very nature has become a res fructuosa, i. e., a thing which, over and above its consumptive value has a use value which may be considered as its fruit (fructus rei), and hence a loan is no longer strictly a contract of the kind known as mutuum, and interest may be asked and taken for its use. Of this subject we shall treat more in detail in the next section, pp. 297 sqq.
15 Summa Theol., 2a 2ae, qu. 78, art. 1; cfr. Lehmkuhl, Theol. Mor., Vol. I, 11th ed., n. 1295 sqq.
16 Slater, A Manual of Moral Theol., I, 514 sq.—Cfr. Conc. Vienn. a. 1311: "If anyone should fall into that error, so that he presumes obstinately to affirm that the practice of usury is not a sin, we decree that he is to be punished as a heretic." (Denzinger-Bannwart, n. 479). Conc. Lat. V: "That is the proper interpretation of usury when, namely, gain and profit are sought from the use of a thing which does not reproduce, with no labor, no expense, and no risk." (Ibid., n. 623).—Prop. damn. ab Alex. VII, n. 42: "It is lawful for the lender to exact something beyond the principal, if he binds himself not to demand repayment of the principal until a certain time." (Ibid., n. 1143).—Prop. damn. sub Innocentio XI, n. 41: "Since ready money is more valuable than money to be paid, and there is no one who does not value present money more highly than future money, a creditor may exact from a borrower something beyond the principal and on that title be excused from usury."—Ibid., n. 42: "There is no usury when something beyond the principal is exacted as being due by reason of benevolence and gratitude, but only if it is exacted as being due by reason of justice." (Denzinger-Bannwart, nn. 1191 sq.)
17 Benedict XIV, Encyclical Vix pervenit to the bishops of Italy concerning usury, dated 1 Nov. 1745, n. 1: "That kind of sin which is called usury and which has its proper seat and place in the contract of loan for consumption consists in this: that someone, from the loan itself (which by its own nature requires that only as much be returned as was received), wishes more to be returned to him than was received, and therefore contends that some gain beyond the principal is owed to him by reason of the loan itself. Consequently every gain of this kind which exceeds the principal is illicit and usurious." (Ibid., n. 1475; cfr. S. Alph., Theol. Mor., l. IV, n. 758 sqq.)
READINGS.—Sporer-Bierbaum, Theol. Mor., Vol. II, 2nd ed., pp. 639 sqq.—St. Alphonsus, Theol. Mor., l. III, n. 720 sqq. (ed. Gaudé, II, 185).—J. Schwane, Die theol. Lehre über die Verträge, Münster i. W., 1871, pp. 56 sqq.—J. E. Pruner, Lehre vom Recht, Vol. I, pp. 420 sqq.—F. X. Linsenmann, Lehrbuch der Moraltheologie, pp. 547 sqq.—V. Cathrein, S. J., Moralphilosophie, Vol. II, 5th ed., pp. 358 sqq.—A. Lehmkuhl, S. J., Theol. Mor., Vol. I, 11th ed., n. 1285 sqq.—M. Cronin, The Science of Ethics, pp.