In Sales

Two Kinds of Injustices in Sales.—Equality between the buyer and the seller requires that each give the other a good equivalent for what he receives. Hence, the injustices committed in sales are reducible to two kinds: (a) injustices in the prices charged or paid; (b) injustices as to the goods furnished or taken.

Injustice Regarding the Price.—Sin is committed in reference to the price charged as follows:

(a) by fraud, when one of the parties uses deception against the other party in order to charge more or pay less than is fair; for one who is party to a contract has the right that no lying or trickery be used against him, a contract being an agreement to which knowledge and consent are requisite;

(b) by overcharge or underpayment; for sale has for its purpose the mutual advantage of the buyer and seller, and hence one of them should not be overburdened for the advantage of the other, but the burdens and benefits should be equally distributed. Hence, it is unjust to sell an object for more than it is worth, or to buy it for less than it is worth.

The Criteria of a Just Price.—(a) The constitutive norm of a just price is not merely subjective, that is, the fairness does not depend on the arbitrary wishes or on the special needs of the contractants, or on some monopoly which controls the prices; it is objective, that is, founded on the value of the thing sold, its capacity to be of benefit and satisfaction to its possessor, its rarity, the amount of labor put into its production and care, etc.

(b) The manifestative norm for commodities that are in common use (such as the necessities of life and the more usual luxuries) is the common judgment expressed either in law (legal price) or in the free custom of buyers and sellers at a particular place and time (market price); for objects that are not in common use and that have no settled price (e.g., rare archeological finds, ancient documents or paintings) the norm is the prudent and free judgment of the parties, or the decision of an expert chosen by them.

The Obligation of Observing Prices Settled by Law Or Custom.—(a) The legal price (e.g., in some countries the prices on government monopolies, such as tobacco and salt), which in modern times is rare, is ordinarily obligatory in virtue of commutative justice, since its disregard harms one of the parties to the sale. But in exceptional cases the price may for reasons of equity be no longer obligatory (e.g., when the lawgiver does not insist on its observance).

(b) The market price is ordinarily of like obligation, and for the same reason. But it should be noted that the current price allows of some latitude, since the common estimate does not agree on exactly the same figure, and hence there is a highest, a lowest, and an average price. Injustice is done when one sells above the highest market price, that is, when one charges a sum notably in excess of that charged by others at the same place and time; or when one buys below the lowest market price, that is, when one pays a sum notably less than that paid by other buyers. St. Alphonsus gives as a rule that when a commodity is valued at 5, it may be sold for 6 or bought for 4; when valued at 10, it may be transferred or acquired for 12 or 8; when valued at 100, it may be exchanged for 105 or 95.

When the Market Price May Be Disregarded Without Injustice.—In some exceptional cases one may disregard the market price without injustice, if there are reasons that justify this.

(a) Reasons that rest on the matter of the contract are that the thing on sale has increased or decreased in value (e.g., the merchandise is of extraordinary excellence or rarity), or that the contractant would lose or risk loss from the sale itself by keeping to the market price (e.g., the buyer would by his purchase deprive himself of money that could be used more profitably in another transaction; the article if sold would have to be replaced by the seller at a higher price; the vendor by waiting can make a better sale later; the object which a person wishes to purchase is especially prized by the owner and cannot be duplicated). In these cases, however, the vendor should give notice to the buyer that for special reasons a higher price is being asked, so that the latter may have the choice of going elsewhere, if he prefers.

(b) Reasons that rest on the manner of the contract are that certain exceptional forms of sales are justified by law or custom and do not violate basic justice. Auction sales are of this kind, and, if the conditions of aleatory contracts are observed so that the risk will be equal on both sides, it is not unfair to take a price above the highest current price or to bid and buy below the minimum price.

If the reason for the increase is the accommodation of the sale itself to the purchaser, because he specially prizes the article, does it justify an increase above the market price?

(a) If the article has become of greater value to many because of its own worth, the market value has also risen, and one may raise one’s price; but if its greater value to many is due only to public distress, as in time of war, it would be a cruel form of injustice known as profiteering to raise the price exorbitantly.

(b) If the article has become of greater value to one person only, the seller may not raise his price for that reason, since the special worth the article has is not inherent in it, and hence it may not be sold by the owner as if it were his own possession. If, however, the purchaser wished to add something as a free gift, there would be no objection to his doing so. The same principles apply to the purchase of an article at less than its value, for the sole reason that ready money has special value for the seller.

Unjust Sales Based on Ignorance of Real Value.—There are also cases in which an object is purchased at an unjust price because its true value was unknown to the contractants or was hidden.

(a) If the value was unknown on account of substantial error (e.g., a woman buys paste ornaments, thinking they are genuine diamonds), the contract is invalid; if it was unknown on account of the individual error of a contractant (e.g., a woman buys a diamond of great value for a few dollars, because the seller did not know the value of the jewel), the contract is unjust; if it was unknown on account of public error reflected in the current price (e.g., an art dealer buys at a low price a masterly painting, because his superior judgment enables him to recognize in it qualities which others did not perceive), the contract is both valid and just. It is also lawful to buy at the present prices when one knows from sources that one can honorably use that the objects purchased will soon rise greatly in value, for one is not bound to share with others one’s personal knowledge.

(b) If the hidden value is no man’s property or is abandoned (e.g., a man buys a field in which he, but not the owner, knows that a treasure is concealed, or he buys a goose and finds gold pieces in its stomach and cannot discover how they got there), the buyer is entitled to acquisition; but if it has an owner who can be discovered (e.g., a man buys a coat in a second-hand store and discovers a large quantity of money in bills sewed inside the lining, and is able to trace back the coat to its former wearer, if he tries), the buyer is bound to restitution.

Obligation of Restitution on Account of Unjust Prices.—(a) Unjust Possession.—If there was bad faith without fraud, the seller should restore the difference between what he received and the highest current price, the buyer the difference between what he paid and the lowest current price. Overcharges or underpayments in conventional prices should be compensated for according to a reasonable standard, such as the decision of the experts.

(b) Unjust Damage.—If there was bad faith and fraud with resultant damages to one of the parties, the losses should be made good, even though the just price itself was not violated by excess or defect (see 1762).

(c) Nullity.—If there was good faith on both sides, there is no obligation of restoration, unless we suppose substantial error, lack of proper consent, conditional agreement, etc., which make the sale null or rescindable (see 1725).

Injustice Regarding the Thing Sold.—Having spoken of the injustices committed in reference to the price, we shall now treat of the injustices committed in reference to the thing sold. The contract supposes that the thing sold be of a certain character, and hence injustice is done if one of the parties wilfully misleads the other about that character.

(a) Thus, the species of the thing sold enters into the contract, and so it is unjust to deceive another person about the nature of the thing that is being sold (e.g., if the seller gives inferior substitutes or adulterated goods to those who desire the genuine and pure article, or if the buyer deceives an inexperienced merchant into thinking that the high-grade clothing material he has for sale is low grade).

(b) The quantity of the thing sold is also a part of the contract, and it is unjust to take advantage by giving less or taking more than is agreed on: “Thou shalt not have divers weights in thy bag, a greater and a less, neither shall there be in thy house a greater bushel and a less” (Deut., xxv. 13, 14).

(c) The quality of the thing sold belongs to the contract, and hence there is fraud if one of the parties deceives the other about it (e.g., if the horse sold is sickly or slow, when he is supposed to be healthy and speedy).

Defects in the Thing Sold.—If there are defects in an article sold, but a fair reduction in the price is made on account of the imperfection of the article, there is no injustice in the price. But the seller is unjust, nevertheless, if he conceals the defects in spite of a contrary condition in the contract, for he injures the buyer by leading him into an agreement against his will.

(a) There is an indicated condition when the buyer inquires whether there are defects in the article, having the intention to take nothing that has any considerable defect. In such a case if the seller conceals even an accidental defect (i.e., one that makes the article less suitable for the buyer), the contract is null on account of lack of consent, or at least, as others think, it is rescindable on account of the fraud practised. But if a defect is inconsiderable, the contract, unless it is expressly stipulated to the contrary, is good and lawful, for there is hardly anything that has not some small defects.

(b) There is an implied condition when the buyer makes no inquiry, but there is a substantial defect (i.e., one that makes the article dangerous or unsuitable for the purchaser), and this defect is hidden, either because it is of a kind that would escape most persons, or because the purchaser is inexperienced or unable to perceive it for himself. Since every person who buys intends to get something useful, there is no consent and the contract is invalid, if one is given something harmful (e.g., corrupted or poisonous food instead of good food), or something entirely useless to him either for service or for sale (e.g., a lame horse instead of a sound horse for one who deals in race-horses).

Circumstances in Which Defects Need Not Be Revealed.—Fairness of price being supposed, the seller is not unjust in not calling attention to defects in the thing he sells, if the buyer does not ask about defects and there is no implied condition that the seller should volunteer the information. This happens as follows:

(a) if the defect is hidden, but only accidental, there is no condition that the seller shall point out the defect, for the understanding is only that the buyer shall receive something serviceable at a fair return for his money, Nevertheless, most merchants wish to please the public and will take back or exchange an article that is not satisfactory;

(b) if the defect is open, but accidental, there is no condition that the seller shall instruct the buyer about things that the latter can and should observe for himself; for it is supposed that the buyer will exercise ordinary care and prudence in making purchases, nor is the seller paid for supplying this, nor for assisting the buyer to make good bargains. Thus, if a man were to buy a one-eyed horse, because he had not examined the horse, he should blame his own negligence, not the silence of the seller, for his bad bargain.