Article III. On the Principal Species of Sales

Retrovendition is a contract by which the seller reserves for himself the right of redeeming his own thing, under the condition that he compensate the expenses, improvements, or similar things. But mohatra is a certain species of retrovendition, or a contract by which someone sells a thing at a greater price on credit, with an agreement that the buyer sell it back to him at a lower price for cash. Let there be an example: Titius, needing cash here and now, approaches Peter, who, unwilling to give money as a mutuum, offers goods to be bought with money on credit and at the highest price, say $100, with an agreement that at once he sell them back to him for cash and at the lowest price, say $90. For thus Peter, not from the contract of mutuum, but from the contract of sale and purchase, gains that increase, and Titius provides for his present necessity by having $90, although after a year he must return $100.

I say 1st. The contract of retrovendition is wholly licit, provided the required conditions are present. The reason is both because in Lev. xxv, 24 such a pact is said to have been imposed upon the Jews, and because it contains nothing which contradicts natural law. But the conditions are 1st. that the price be diminished according to the estimation of the burden which is imposed upon the buyer; 2nd. that there be no pact concerning a retrovendition to be made at a greater or lower price; 3rd. that by the pact it not be required that the risk of the thing sold fall to the harm of the seller, since this of itself pertains to the buyer, unless however the price is increased according to the estimation of the risk; 4th. that the thing be sold back as it is handed over, vacant or with fruits. - Cf. St. Alphonsus, n. 812. - Kenrick, n. 61.

I say 2nd. The contract of mohatra is of itself illicit and nothing but disguised usury, as is established from proposition 40 condemned by Innocent XI, which reads thus: "The contract of mohatra is licit, even with respect to the same person and with a contract of retrovendition previously entered into with the intention of profit." - Cf. Viva on this proposition.

I say. Sale under the spear (auction, public sale), namely that which is made through a crier and in which the thing is assigned to the final bid, is licit, whether it is done with the owner's consent or against his will or by public authority, whether it is bought below the lowest price or sold above the highest; because public power approves that the just price be publicly constituted from the concurrence of buyers. Hence if buyers concur, the thing becomes more estimable; if they do not concur, it is held cheaper. - Cf. St. Alphonsus, n. 808.

"A Catholic official whose office is to preside when goods are sold under the spear," among which "sometimes there are found books of heretics or books containing other obscene things," is not bound "to investigate whether among the goods which are sold under the spear there are found books of heretics or others containing obscene things. But if by chance he has learned this, and can prevent bad books from coming to bidders who will abuse them, let him indeed do this, since each one ought to impede the sin of his neighbor when he can do this conveniently, or without his own grave harm." - S. C. de P. F. 27 June, 1820.

Question 1. Can a seller send fictitious bidders, so that the price of the thing may rise?

Resp. Negatively, according to St. Alphonsus, because this appears too fraudulent to be excused, since it tends to deceive sincere buyers, and therefore inflicts injury upon them, since they are the cause that the price rises from fraud, and not from the natural concurrence of things, that is, from the free consent of buyers. Nevertheless others say that, by force of custom, if any exists, indulgence is to be granted to those who act thus. - Cf. St. Alphonsus, n. 808; and Hom. Ap., n. 175. - Kenrick, n. 50.

Question 2. Can a buyer make an agreement with others, that they not bid, or not offer more?

Resp. Negatively, according to St. Alphonsus and several other theologians, at least in the case of a forced auction. The reason is that the seller has a right that the buyers be perfectly free and that the increase of the price not be impeded. Yet Cardinal de Lugo with Diana and others seems to hold the contrary, at least with regard to the guilt of injustice, and he admits that it is the common opinion of the Doctors that then a sin is committed only against charity. Cf. St. Alphonsus, n. 808. - Lugo, disp. 26, n. 175. - Baller., note (b), p. 739.

Monopoly is distinguished in two ways. One is legal, which consists in the power of selling certain goods granted by public authority, for a reasonable cause, to one or to several; and the other private, which consists in a manner of acting by which one or several bring it about that they alone sell or buy something.

I say 1st. Legal monopoly is licit, provided it is done with a just price. The reason is that, on account of a just cause of the public good, the Prince can grant it as a privilege or for exacting a tax from merchants.

I say 2nd. Private monopoly is illicit in the following cases: 1st. if a merchant impedes by fraud or lie, lest other goods be brought in, so that he may sell his own goods more dearly with common detriment; 2nd. if one or a few buy all the goods so as afterward to sell them more dearly; 3rd. if workmen or craftsmen agree that they will not teach their art except at an unjust price, or that no one will complete work begun by others; 4th. if laws enacted by the State for preserving the just price and not restricting commerce are violated. For these laws oblige in conscience and indeed, as it seems to us, to restitution when others suffer harm from the violation. Such laws protect rights, secure subjects against fraudulent actions of sellers and companies of merchants. These laws among us are "The Sherman Law"; two or three or more of the last sections of the most recent law, "The Clayton Trust Bill," amend that prior one, while other sections of the same and one section of the law, "Federal Trade Commission," complete it.

"Sec. 6. That the labor of a human being is not a commodity or article of commerce. Nothing contained in the anti-Trust laws shall be construed to forbid the existence and operation of labor, agricultural or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade under the anti-Trust laws." - Clayton Trust Bill, Section 6. Cf. The World Almanac an. 1915, p. 300. See below n. 994, Q. 5.

Question 1. Whether and in what way do merchants sin who conspire not to sell their goods except at the highest, although just, price?

Resp. They certainly seem to sin against charity, because although they are not bound to sell below their own price, nevertheless they are bound not to dissuade others from selling at a lower price. Thus, although by charity you are not bound to give alms to such a poor man, nevertheless you are prohibited from dissuading others if some wish to give it. - But more probably they do not sin against justice, because if others are compelled to buy at the highest price, they are not compelled by the sellers, but by their own necessity, which cannot be called true coercion on the part of the sellers. Yet the highest price here must be understood as that which would exist without the monopoly, not that which arises from the monopoly. - Cf. St. Alphonsus, n. 817. - Lugo, disp. 26, n. 173.

Question 2. Do merchants sin against justice or against charity who, at the time of harvest or vintage, buy all the wheat or wine of the region at the cheap price then current, so that afterward they may sell more dearly?

Resp. Negatively, more probably, as it seems, with regard to justice, provided they do not sell above the highest price which would be current with the monopoly excluded. The reason is that they violate the right of no one. Indeed a negative answer must also be given, at least probably, with regard to charity, provided they do not induce others to sell more dearly, nor themselves sell above the highest price which would have place with the monopoly set aside, because they use their own right; for no one is bound to neglect his own advantage so as to avoid another's harm, when he is not obliged to avert it. - Cf. St. Alphonsus, n. 816. - Kenrick, nn. 64 et seq.

Question 3. Can the justice of the price be taken from the very state introduced by force of monopoly?

Resp. Negatively. The justice of price must not be taken from the state which monopoly has introduced, but from the state which the goods would have with the monopoly excluded. For if the justice of price depended on the will of the seller or buyer unwilling to sell or buy except at such a price, in fact no price would be unjust. Therefore the justice of price "ought," as Lugo says, "to depend on other antecedent circumstances, namely on the abundance or scarcity of goods and of money, on the many or few who sell or buy, and on the necessity of selling or buying which they have." In the case of monopoly the abundance "of goods is the same" as if no monopoly had existed; "also the will of selling," for they wish to sell their own things and at the same time "to extort a greater price; but if they cannot obtain this, they will sell at a lower price; therefore there is nothing from which, antecedently to the will of the sellers, the price is to be increased, but the same price must be estimated just which would be just if monopoly had not preceded." Hence "monopoly occurs when someone at the time of harvest or vintage, for example, buys all the wheat or wine, or the greatest part of it, at the cheap price then current, so that afterward all may be compelled to buy from him at the highest price; and this very thing will be if some few agree and conspire for this. Therefore this will be against justice if afterward they sell above the highest just price. But the highest just price must be understood, not that which results from their agreement, who are unwilling to sell except at such a price, but that which, with that agreement excluded, would be the just price, considering the quantity of wheat or wine for sale and the greater or lesser frequency of buyers." (Lugo, disp. 26, n. 176.) And thus also when monopolists by force or fraud deprive small sellers of their commerce by establishing shops in the same neighborhood and selling the same goods at a price below the lowest, and then, having obtained the whole commerce of these goods, sell them at a price above the highest just price, they certainly violate commutative justice and are bound to restitution.

In like manner they are bound to restitution when they compel other sellers of the same goods to sell at a price above the highest just price, if, for example, monopolists greatly increased the price of coffins, which they would not sell to small undertakers unless they pledged that they would sell at too high a price.

But are these second sellers, selling at that price now current, which otherwise would be unjust, also bound to restitution? Very many indeed affirm this, whose reason is urgent: these are obliged because the price is unjust. Therefore not only the imposers, which all hold, but these also must restore. But the Salmanticenses: "the truer opinion is the one denying that such sellers sin, even if they are not ignorant that the increase of price had its origin from an unjust agreement, because now that price is common and vulgar. But that it has been increased from the injustice of others is accidental to me, because by selling a thing at the current price, I sell at the just price." (Salmanticenses.) Because the just price of the market is judged among all to be that which now commonly runs, from whatever source this comes. - Sal., tr. 14, cp. 2, p. vi, n. 57.

They also commit injustice who too greatly increase the price of things which are called of first necessity, for example, bread, flour, coffee, milk, etc., because the liberty of the contracting buyers is lacking, and hence equality; the same quantity is always consumed; for whether they wish or do not wish, men must obtain those things for themselves; hence there is the same will on their part. - Cf. Bulot, n. 804, 111, 3rd. - Lugo, l. c. - Bouvier, Law Dictionary, Restraint of Trade.

Sale through brokers is that which is not made immediately by him to whom the things belong, but through others by commission, and these are called brokers. But brokers can be either merely friends, or hired for this by a special wage, or employed for diverse works at an annual price.

Question 1. Can a broker who sells above or buys below the price designated to him retain the excess of price for himself?

Resp. Negatively, generally speaking, because he has no title for retaining anything. For he does not have it by reason of the thing, because it is not his own but the owner's; nor by reason of labor and industry, at least by a strict title of justice owed to him, because if he has been hired by a stipend, he has a right to nothing else; but if he renders the industry gratuitously, he has already renounced a wage. Except: 1st. if by extraordinary and undue labor, or by wholly special industry or diligence, he made the thing better; 2nd. if the owner expressly or equivalently declared that he requires nothing beyond the determined price; 3rd. if the owner knew the broker's manner of acting and held it ratified. Cf. St. Alphonsus, n. 825.

Question 2. Can the broker buy for himself a thing to be sold at a price determined for him, and afterward sell the same thing as his own at a greater price?

Resp. Affirmatively, with two conditions posited, namely: 1st. that, having employed moral diligence, he does not find a buyer who offers more; otherwise he would act against his own office and the certainly known will of the mandator; 2nd. that he buy the thing for himself not fictitiously, but truly, so that he undergoes its risk; and if perchance he does not sell it for so much, nevertheless he renders the determined price; otherwise equity is not preserved.

Question 3. Can a broker retain for himself those things which the seller gives gratuitously solely out of regard for him?

Resp. Affirmatively, if the true donation is established; because a merchant, absolutely speaking, can yield something from his own profit to some broker, that he may bring him to his shop; but for this it is required that he be truly disposed to sell to any other at the higher price, and in fact ordinarily sell thus. But the confessor ought not easily to give credence to brokers asserting that such donations were made to them, unless there is question of places where merchants are accustomed to act thus. - Cf. St. Alphonsus, n. 825; and Hom. Ap., n. 189.