Article VI: On Society

1157. DEFINITION. The contract of society is an agreement of two or more by which they contribute some thing, whether movable or immovable, or work, that is, labor or industry, for pursuing a common gain (or other intended thing) (H. Ap., X, 222).

Associates can contribute a thing and work together, or either one only. Anyone can, without the consent of the others, join another to himself as regards his own portion, but not admit him into the society. Hence that saying: "The associate of my associate is not my associate" (l. XX, ff., Pro socio).

DIVISION. Society is called: 1. universal, if it embraces all present goods, or future goods to be acquired from industry; 2. particular, if it embraces only determined things or works. This is civil or commercial, according as it regards the civil acts of private persons, or acts of commerce.

1158. PRINCIPLE. The contract of society, if the required conditions are present, is a legitimate mode of carrying on negotiation. It is established: 1. from the natural Law; for it is not less licit for several together than for individuals separately to make gain from their own things, provided due equality is observed; 2. from the civil laws of all nations; 3. from universal use.

The conditions of a licit society are the following:

1. The matter must be honorable; for that is not licit to a society which is prohibited to a private person.

If the society has an illicit end, for example for publishing a bad newspaper, the rules about cooperation and about a base contract must be observed (n. 517 and 1036); but if it has an unjust end, the rules about restitution in solidum toward those damaged must be applied (n. 991 ff.). See Ami du Cl., 1911, p. 462.

2. The capital, or thing contributed, remains in the ownership of him who contributed it, and is conceded to the society only as regards use and convenience. Wherefore the peril of the capital belongs to the owner alone.

Nor is it licit to add a pact about securing the capital in the case of fortuitous chance: for thus gain only, and not damage, would be common, and there would be had a leonine contract, which is also called ad caput salvum, if it is a question of a society in cattle.

When the society is finished, the capital must before all things be restored to the owner.

3. Gain, or that which, after damages and expenses have been deducted, remains beyond the capital, must be divided among the individual associates, in proportion to the capital contributed or the work furnished.

4. Damage which occurs by the sole view of the society (for example if wares are snatched away) must be borne by the individual associates in the same proportion in which, in the contrary case, the gain would have been divided (III, 905).

If one contributes money, but another labor, "it can sometimes happen that the value of the industry so exceeds the value of the use of the money that a pact is rendered just (which of itself would be unjust), namely that even the capital be divided. And conversely, in some places the value of the industry is so slight, on account of the custom of the place or on account of the frequency of workers, that the worker is rightly subjected also, as regards a part, to the peril of the capital, although the whole peril ought per se to belong to the owner alone" (III, 907; H. Ap., X, 224).

Hence associates are held to restitution: a) Using common things for private use, when the others are unwilling. b) Pursuing private gain, while they ought to be occupied with the common one. c) Squandering common things. d) Not contributing into the common treasury whatever they have acquired by negotiation. e) Neglecting to fulfill their parts. f) Rashly implicating themselves in businesses which scarcely are going to have a happy outcome, with the associates ignorant or unwilling (Konings, n. 1014).

1159. IT IS ASKED. In what way is a society ENDED?

Resp. It is ended: 1. by the completion of the time constituted for the society, or by the negotiation being finished; 2. through the consent of the associates, even tacit consent, namely if one of the associates begins to negotiate separately. For the rest, neither of the associates can withdraw from the contract, unless this is necessary for the public good, or unless the other would be a damage to the society, or would not stand by the pacts. But one withdrawing unjustly is held concerning the damage toward the associate; 3. through the death of either associate, because the society does not pass to heirs, except as regards businesses already begun (or unless there were present a pact confirmed by oath with the deceased associate); 4. through exile or the religious profession of either associate (likewise from the new Law through interdiction or bankruptcy, that is, the overthrow of his goods); 5. through impossibility of satisfying his part, for example on account of sickness; 6. through the destruction of the money contributed; 7. through such a change of things that the society becomes inept for the end (III, 907, q. 6; H. Ap., X, 230).

Note. Concerning the contract of society which they call threefold, we shall say a few things; for today it has gone into disuse. It is licit, according to grave Authors (cf. III, 908).

The threefold contract is entered in the following way: Lucius contributes a thousand gold pieces into society with Titius, so that they may be expended in negotiation: behold the first contract of society, from which gain is hoped, for example fifteen for each hundred. But since hope of gain is not without peril of the capital, Lucius yields to Titius five from the fifteen hoped for, so that he may secure the capital for him: behold the second contract, by which the capital is secured. Moreover, having judged that a small certain thing is better than a greater uncertain thing, again from the ten hoped for he yields five to the same Titius, so that Titius, whatever may happen, may certainly pay five to him: behold the third contract, by which the gain is secured.