CHAPTER II: ON THE OBLIGATION OF CONTRACT

The obligation of a contract is the bond by which someone, by force of the contract, is bound to something to be given, done, or omitted.

858. Principles. - I. Any contract rightly entered produces an obligation in the forum of conscience, at least on the part of one of the contracting parties; because in a contract some right is attributed to one or to each party; but to every right there corresponds its own obligation; therefore, etc.

II. A contract rightly entered, unless laws establish something else for the particular case, has force only between the contracting persons alone, or others who either hold their place or have cause with them, such as heirs, mandators, etc. The reason is that no private person can impose a burden or confer a benefit on another unwilling person, nor do contracts have force except from the private will of the contracting parties.

III. A contract rightly entered obligates not only to that which is expressed in the pact, but to all consequences which equity, law, or usage demand according to the nature of the agreement. The reason is that contracting parties are judged to act with good faith, and therefore to will not only what is expressly included in the stipulation, but also what is wont to arise from it.

Hence the intention of the contracting parties must be carefully investigated, if it can be clearly and expressly established. But if it remains obscure and ambiguous, it can be explained both from the matter of the agreement, and from the usage of places, and from the character of the persons. Finally, if after all things have been weighed the doubt cannot be removed, an amicable transaction is to be advised.

859. Questions. - Query 1° To what extent does a contract liable to rescission obligate?

Resp. That contract can be called conditionally obligating, namely if nullity is not invoked. The reason is that the legislator, for the good of peace, did not wish that contracts of this kind should be judged invalid and be invalid, except when their nullity was expressly invoked and obtained. This follows from what was said concerning contracts of minors, wives, and interdicted persons, n. 836 and following.

Query 2° Are contracts valid, and do they obligate in conscience, which of themselves are valid, but which were entered without the formalities prescribed by civil law for their validity?

Resp. There is a threefold probable opinion.

The 1st Opinion affirms, because by natural right the consent alone of the parties suffices for inducing an obligation, and human law does not take away the natural obligation between persons otherwise capable, although it denies civil action.

The 2nd Opinion denies, because laws invalidating the aforesaid contracts are founded on a presumption not only of fraud, but also of common danger; for the common good demands that an occasion for any frauds whatever be taken away; and therefore the law can and ought to take away also the natural obligation of an invalid contract in the external forum.

The 3rd Opinion holds that in these contracts the possessor is to be preferred until by sentence of the judge he is condemned to make restitution. - Thus St. Alphonsus,¹ who adds "that this opinion is altogether to be held in practice, from the fact that, since possession attributes a certain right, the possessor cannot be despoiled of the thing unless the right of the other is established."²

860. • Query 3° How does the obligation of contracts cease?

Resp. The obligation of contracts ceases 1° By payment, or by the performance of any thing owed, or also by the execution of a promised or otherwise owed deed.

2° By novation, or the substitution of a new debt for the old debt, which is thus extinguished; for example, I promised to give you ten casks of wine each year; now I agree with you that I am no longer bound to give wine, but $1,000: then the obligation of giving wine is extinguished.

3° By condonation, or the act by which the creditor remits the debt to his debtor from full liberty. For anyone can cede from his right in all those things which do not regard the public good, provided he was not incapable of contracting.

4° By compensation, or fictive and reciprocal payment, which has place when persons are debtors toward one another in turn.

5° By confusion, which has place when the obligation of the debtor and the right of the creditor are united in the same person, for example, if the creditor becomes heir of his debtor, or the debtor of his creditor, or the same person becomes heir of the creditor and of the debtor at the same time.

6° By destruction or loss of the thing owed, which sometimes frees the debtor from obligation, as in merely gratuitous contracts, and sometimes in others, where no fault of the debtor occurs. But sometimes it does not free, for example, if it has happened through the fault of the debtor, or if he was in culpable delay ... etc.

7° By rescission, or rescindibility, which has place when a contract consisting of essential conditions is dissoluble on account of some defects. That contract is valid until it is rescinded, as was said above.

8° By prescription, concerning which it was said above, Treatise on Justice, n. 657 and following.

861. • Query 4° Does cession of goods free from full payment?

Resp. 1° Negatively as to voluntary cession, a special agreement between the creditors and the debtor being excluded by force of which the latter is altogether freed. The reason is that the creditors have not been made altogether unharmed, and therefore there still remains an inequality to be repaired; and although creditors then compound with the debtor concerning only a certain part to be paid, still they act thus because they cannot have more, nor on account of this do they renounce the right which they have to full payment if the debtor can ever pay.¹

Yet there are some today who think that, on account of the wholly changed nature of commerce, departure can be made from the opinion of former theologians. For commerce, as they say, today is carried on chiefly on credit, and almost wholly rests on credit. Hence creditors, foreseeing that some out of their many debtors will not be solvent, in order to keep themselves unharmed, have become accustomed to demand a greater price and also a greater addition for money for merchandise sold on credit, as is usual. They add that among those conducting commerce it is judged tacitly agreed that, from an unfortunate debtor ceding his goods, they require nothing beyond that about which agreement was made. Finally, they say, the law freeing the debtor in advance favors all, so that the same benefit which today comes from it to Peter with the damage of Paul will after perhaps some time come to Paul with the damage either of Peter or of another. The wiser will see how much these things are worth, and whether, at least taken together, they render that opinion probable; and they will rightly reply: creditors, although they foresee in general that some out of their debtors will not be solvent, do not foresee this in the individual case and as to each one; for to those whom they would foresee would not be solvent they would neither sell on credit nor furnish money; that nothing is certain concerning that tacit agreement among merchants; but that the civil law, although it uses those words: "forever discharged from all debts and claims,"² cares little about conscience and intends nothing else than to deny action to the creditor. - Meanwhile it is most certain that those are bound to restitution, as formally unjust damagers, who by their own grave fault have come into that necessity, namely of ceding their goods.

Resp. 2° Negatively also as to judicial cession; for the privilege of cession consists only in this, that an unfortunate debtor of good faith can no longer be pressed judicially; therefore, if he acquires new goods, he ought to satisfy the creditors up to full payment.³ Except if, from the circumstances of things, the creditors seem to condone all the old debts.

Query 5° Can one who is about to cede his goods secretly reserve anything to himself?

Resp. 1° Certainly he sins against justice if, beyond those things which are left to him by the law in each State (by the exemption laws¹), he retains things of great value, because he inflicts damage on the creditors.

Resp. 2° If, however, those things which are left to him by law do not suffice for the sparing sustenance of himself and his own (i.e. of children, father, mother, and wife), and therefore he also retains other things necessary for such sustenance, he is not to be disturbed. Thus from natural right, from which civil laws in such a case would unjustly derogate. Cf. Gousset.²

862. • It is useful to add in this place from Kenrick several cases in which justice is violated and the obligation of restitution is contracted by those who burden or have burdened themselves with debt.

The 1st is of those who contract debt with the intention of never paying it; as sometimes happens to buyers of merchandise, who, after money has been obtained from its sale, flee away.³

The 2nd is of those who rashly contract it, with no probable hope shining forth that they will be capable of paying; for it is not licit to risk with damage to others, or to seek profit.⁴

The 3rd is of those who neglect to pay it with detriment to creditors, which they are bound to repair, whenever by their own fault they refuse to satisfy them at the time assigned, even if they use the benefit of the law; for if from this it happens that creditors suffer a loss of goods, satisfaction must be made to them; otherwise, if fault is absent: for then the damage must be judged to happen by chance.⁵

The 4th is of those who, using various artifices, induce creditors to remit part of the debt, lest they lose the whole, or lest payment be deferred longer, or lest they be entangled in lawsuits: but those who obtain from creditors a remission of part because of anticipated payment, the creditors being driven by no necessity but consenting freely, can be excused, since custom so carries it, and the convenience is worth very much by common estimation.⁶

The 5th: the wife who makes excessive expenses in buying clothing, or in another way, and the sons who squander money given to them, cooperate with the injustice of husband and father, if they know that the husband and father is not equal to paying. Yet see n. 707, q. 3°.

The 6th: whenever someone knows himself unequal to paying, nor hopes that he can increase his estate by trading, he is bound to leave business, his goods having been handed over for the payment of debt; for no one is permitted to trade with the damage of another. Often, however, merchants are excused, to whom for the most part some hope shines forth.¹

The 7th: those who have received goods or money to be hidden at their place, on this condition, even tacit, that they would aid the debtor thereafter.²

The 8th: those who, after their things have been transferred to others by a fictitious title, use the benefit of the law in order to free themselves from debt, become guilty of perjury and injustice; for they emit an oath by which every fraud of this kind is denied.³

863. • Query 6° When does a law invalidating a contract bind conscience already before the sentence of the judge?

Resp. When the invalidation is founded either in a definitive law of dominion [(3) p. 484], or in the baseness of the pact (n. 834), or (which is often difficult to discern) directly in the motive of the public good.⁴