§ 2. On Certain Kinds of Purchase and Sale

302. 1. On sale by auction. A sale by auction, which is also called an auction or bidding,¹⁶⁹ is a sale in which, before several bidders, the thing to be sold is proclaimed by a herald and awarded to the one offering the greater price. It is twofold: the one voluntary, which is made spontaneously by the owner; the other judicial, which is commanded by a legitimate judge, e.g., in order to make a division of goods or to pay the debts of creditors.

The just price in this sale by auction is that which without fraud is offered by the last bidder and accepted by the seller, whether it is above the highest or below the lowest price.¹⁷⁰ Hence, e.g., if some painting is sold at auction for a price of 100,000 francs, it is a just price; but if books whose true price is 1,000 francs are sold for 10 francs, this also is a just price. The reason is that such sales are, as it were, aleatory, in which the thing to be sold does not seem to have a determinate price. For many things depend upon chance. There is added also the common consent of the people and of the legislator, who never call the prices obtained unjust unless fraud was employed. Such fraud can be employed both by the seller and by the buyer.

Fraud on the part of the seller is present if he establishes fictitious bidders who, without the intention of buying the thing, intend only to increase its price. Nevertheless, such fraud does not seem to be grave, for the fictitious bidders undergo the danger of paying the price offered, just as true bidders do; grave fraud is present, however, if the fictitious bidder is unable to pay the price offered. Furthermore, the seller can commit frauds as in other sales, e.g., by concealing substantial defects, changing the thing sold for another, etc. Whether the seller can licitly withdraw the thing from the bidding if a sufficient price is not offered depends: a) upon the manner in which the auction was publicly announced; b) upon the statutes or the custom of the place.

Fraud on the part of the buyer, however, is present if by illicit means he prevents others from bidding, so that he buys the thing below the lowest price. I say, however, by illicit means, for the buyer can employ lawful means, e.g., exhort or ask another to abstain from bidding; indeed, he can enter into an agreement with one or another buyer that they may assist one another in buying at the lowest price. Thus, at least, without injury to justice strictly so called. Charity, however, seems to be injured if, through the employment of these means, a needy seller is compelled to hand over his things for an insufficient price.¹⁷¹ Nevertheless, the practice of several dealers in secondhand goods seems unjust to me: having entered into a syndicate or pact among themselves, they truly and morally compel others to withdraw from the bidding and thus buy things at a wholly disproportionate price, especially in sales which are held at stated intervals by montes pietatis. For they act in this manner: whenever an outsider wishes to buy a thing, they always bid more and more, so that he must either withdraw from the bidding or pay a truly excessive price. When outsiders have thus been eliminated, they offer wholly insufficient prices for the remaining things to be sold, which the montes pietatis are compelled to accept, since the things proposed must altogether be sold. When the sale has ended, all united in the said syndicate divide among themselves the things bought or the profits obtained.

¹⁶⁹ Auction (Versteigerung, vente aux enchères, auction-sale).

¹⁷⁰ St. Alphonsus, Theol. mor. l. 3, n. 808.

¹⁷¹ Cf. Lehmkuhl, Theol. mor. I, n. 1337.

303. 2. On monopoly. A monopoly¹⁷² is the exclusive power of selling certain merchandise granted to one or a few sellers. It is either legal or established by private authority. A legal monopoly is the power, granted by public authority itself, of selling certain things exclusively. It is most frequently present and is exercised either by the government itself,¹⁷³ e.g., with regard to railways, the postal service, and the sale of tobacco, salt, etc.; or by private persons from the authority of the government, e.g., the sale of things made by a proprietary art,¹⁷⁴ the sale of medicine by certain pharmacists alone, etc.

A monopoly is established by private authority in many and diverse ways, e.g., a few men bring it about that they alone sell a certain kind of merchandise at a price pleasing to themselves.

A legal monopoly is legitimate, provided, however, that it is contained within just limits. This is evident, because it is a good means of acquiring money necessary for governing the republic; often it is nothing other than an indirect tax. Furthermore, it favors the public good in diverse ways.

Private monopolies are not illicit in themselves if, namely, they are instituted for the purpose of obtaining by legitimate means a good but just price. But if unjust means are employed, or an exorbitant price is demanded, or other abuses creep in, then private monopolies are unjust, as is evident of itself. In present times there exist very many private monopolies or similar combinations¹⁷⁵ which declare war upon one another. Since in civilized regions laws are not wont to permit excessive increases in demanding a price or the employment of wholly unjust means, it is often not established that existing private monopolies are certainly unjust; and consequently the confessor, at least ordinarily, is not bound to speak concerning them unless in a particular case the injustice is manifest,¹⁷⁶ as happens in certain modern syndicates.

¹⁷² Exclusive sale (Alleinverkauf).

¹⁷³ State monopoly (Staatsmonopol).

¹⁷⁴ Patent right (Patentrecht).

¹⁷⁵ Commonly, ring, cartel, trust, syndicate, etc.

¹⁷⁶ Billuart, De contract. diss. 2, a. 11, treats monopoly excellently; cf. also Staatslexikon der Görres-Gesellschaft, s.v. "Monopol," "Kartell," "Trust." Older theologians commonly teach that private monopolies injure at least charity; but at that time graver abuses seem to have crept into monopolies.

304. 3. On sale through brokers.¹⁷⁷ A broker is one who buys or sells not in his own name but in the name of another; he is therefore a mandatary, whose rights and obligations he consequently has. Today purchase and sale through brokers is most frequent.¹⁷⁸ The rights and obligations of the broker depend either upon law or upon free agreement. Brokers not rarely injure commutative justice because by unjust means, whether from their own mandator or from the other person with whom they contract, they procure an advantage for themselves. Particular cases can be resolved correctly if the general principle is always kept before the eyes: a broker is nothing other than the mandatary either of the seller or of the buyer. Therefore, e.g., if a broker sells more dearly or buys more cheaply than had been determined beforehand by the mandator, he acquires this profit not for himself but for the mandator, unless, however, he procured this profit by altogether extraordinary industry. Likewise, a broker cannot licitly buy for himself the thing to be sold at the established lowest price and afterward sell the same thing more dearly while retaining the excess of the price; for the mandator is rightly considered to disapprove this mode of acting. If, however, the broker cannot find a buyer, he can say this candidly to the mandator and then buy the thing for himself at the established price.

You will ask: Can craftsmen, e.g., shoemakers, masons, etc., retain for themselves reductions in price, five or ten percent, made by sellers for their benefit, while demanding the full price from their mandators? A sufficiently universal custom permits this; nevertheless, the matter is full of dangers, because sellers are wont to make such reductions only in appearance, while in reality they diminish either the quality or the quantity of the merchandise to the detriment of the buyer.

¹⁷⁷ Agent, broker, middleman (Agent, Makler, Sensal, courtier, commissionnaire).

¹⁷⁸ Agency transactions (Agenturgeschäfte).