Point I. On Buying and Selling Generally

I. Notion. Buying and selling is a contract by which, through mutual consent, some thing is exchanged for a price. It differs from exchange, in which a thing is granted on each side.

II. Subject. With natural law considered, the same persons are capable of buying and selling as are capable of donating. To what extent civil law excludes some persons, learn from the law of one's country.

III. Object. Besides what was said in n. 832 and following about objects unfit for contracts in general, these things are specially to be noted:

1. The sale of another's thing, with natural law considered, is invalid; for no one enjoys the faculty of disposing in any way of the thing of another. But the seller, if he has acted in bad faith, is bound to render the owner and the buyer unharmed; if in good faith, he ought to refund the price to the buyer. The buyer, if he has proceeded in bad faith, is bound to restore his own thing to the owner and to reimburse him for other damages perhaps following; if in good faith, he is per se bound to restore the thing to the owner, but, if otherwise he cannot recover from the seller the price paid, he can return the thing bought (n. 983).

Nevertheless, let it be seen what civil law establishes, which one who has proceeded in good faith may licitly follow and urge.

2. The sale of a determinate thing already sold to a third party, with natural law considered:

a) Is invalid if the sale, with civil law considered, confers a right in the thing, as obtains, for example, in France. The reason is that there is had the sale of another's thing.

b) If the sale, with civil law considered, confers only a right to the thing, and delivery, by which a right in the thing is conferred, has not followed, it is likewise invalid, because the seller cannot grant to a third party the right which he has already granted to the former buyer. Nevertheless the delivery of the thing, although injurious to the former buyer, seems valid, because the seller, since he is still owner of the thing, is able to grant its ownership or right in the thing to the third party. But in the case he is per se bound to take care that the former buyer obtain the thing, and in addition, if he has proceeded in bad faith, to reimburse the former buyer for damages perhaps following from the injury.

What the law is, with civil law attended to, see in the Civil Code.

c) The sale of a thing which at the time of sale has totally perished is manifestly invalid. If the thing has perished only in part, with natural law considered, it must be resolved according to what is to be said in n. 898.

d) Finally, a thing bought with another's money belongs to the buyer; who nevertheless, as is clear, ought to return the money to the owner.

IV. Price of the object, concerning which more must be said.¹

1. Notion of price. Price can be defined: the saleable or exchange value of a thing, expressed in money. It is said:

a) Value of a thing. Now the value of a thing is that on account of which it is worthy of estimation. But it is worthy of estimation on account of its aptitude for serving man.

b) Saleable. A twofold value of a thing can be distinguished: intrinsic and saleable. Intrinsic value is its aptitude immediately for serving man's necessity or utility. Intrinsic value again can be distinguished into objective and relative, according as a thing is commonly necessary or useful to human beings, or is specially necessary or useful to a determinate person, for example to the seller or buyer. Saleable value is the aptitude of a thing for serving the acquisition of another thing. That intrinsic and saleable value of a thing are not to be confused is clear, for example, from the fact that water is very useful, but is scarcely a medium for acquiring another thing.

c) Expressed in money; namely, so that the acquisition of necessary and useful things might be rendered easier, there was sought a common sign, a common measure or norm, which would represent the saleable value of all things; and money was selected for that end. Therefore money represents and expresses the saleable value of things; but the saleable value of things expressed in money is called price.

There are those who define price as: the objective value of things expressed in money. But price is money insofar as it has been constituted the medium of acquiring another thing. But money is the medium of acquiring another thing insofar as it represents or expresses saleable or exchange value. Therefore price is saleable value expressed in money.

2. Division of price. Price is distinguished into legal, common, and conventional, according as it is determined by legitimate authority, by common estimation, or by the free agreement of the contracting parties. But since human estimation is not accustomed to agree exactly in one point, the common price admits a certain latitude, and is distinguished as highest, lowest, and middle. Further: "the price of cheap things has a smaller latitude than that of precious things. For wine, either if it is worth 10, can be sold for 12 or 8 ... or if it is worth 100, can be sold for 105 and 95 ... But a house or estate, which perhaps was sold for 20 thousand, after a year will be able to be bought for 12 thousand" (St. Alphonsus, III, 804). These things, however, are now to be taken more broadly.

Corollary I. The saleable value of things, and consequently price, is subject to variation according to various circumstances. Thus, for example, generally it increases by reason of scarcity, and decreases by reason of abundance of merchandise (St. Alphonsus, III, 801).

Corollary II. A great number of buyers for the most part indicates that people now need some thing, or at least use it frequently, and therefore that the saleable value of the thing is greater; consequently the price increases. The contrary obtains if buyers are few (St. Alphonsus, III, loc. cit.).

Corollary III. If there is scarcity of money, the saleable value of things is not thereby changed; consequently the price decreases materially rather than formally; namely, a smaller sum of money is indeed received for the thing sold, but the money itself, since it is rare, increases in value, or, if you prefer, can represent a greater saleable value of things.

3. The just price is per se that which represents a saleable value equal to the saleable value of the thing bought and sold. By accident even a greater or lesser price can be just; likewise sometimes the conventional price is just. It is said:

a) The just price per se is that which represents a saleable value equal to the saleable value of the thing bought and sold. For in the contract of buying and selling, equality between the contracting parties must be preserved. But equality is preserved only when the price represents a saleable value equal to the saleable value of the thing bought and sold.

The major is deduced from the fact that price, or, if you prefer, the contract of buying and selling, was invented for the common good, and therefore ought not to be more burdensome to one than to the other; in other words, equality between the contracting parties must be preserved. It is confirmed from the fact that buying and selling holds the place of the contract of exchange, namely insofar as price holds the place of the thing with which another thing would have to be acquired if price had not been invented. Hence, just as, clearly, equality between exchangers must be preserved in the contract of exchange, so also in the contract of buying and selling between buyer and seller.

b) By accident even a greater or lesser price can be just, for example if the seller, receiving a price just per se, would by accident suffer detriment, namely from the fact that the thing was worth more to the seller on account of peculiar circumstances; these matters will become clearer from what is to be said afterward.

c) Likewise sometimes the conventional price is just; this too will become clearer from what is to be said afterward.

St. Thomas speaks thus: "We can speak of selling and buying in two ways: in one way according to itself, and according to this buying and selling seems to have been introduced for the common utility of each, namely when one needs the thing of another and conversely ... But what has been introduced for common utility ought not to be more burdensome to one than to the other; and therefore the contract ought to be established between them according to equality of the thing; but the quantity of the thing which comes into human use is measured according to the price given; for this money was invented ... and therefore if either the price exceeds the quantity of the value of the thing, or conversely the thing exceeds the price, the equality of justice will be taken away; and therefore to sell a thing more dearly, or to buy it more cheaply, than it is worth, is in itself unjust and illicit. In another way we can speak of buying and selling according as by accident it turns to the detriment of the seller ... and in such a case the just price will be such that regard is had not only to the thing which is sold, but to the damage which the seller incurs from the sale; and thus something can licitly be sold for more than it is worth in itself, although it is not sold for more than it is worth to the one having it" (St. Thomas, II-II, q. 77, a. 1; St. Alphonsus, III, 807).

From what has been said the following norms are deduced:

a) If a legal price exists, this must be observed. For just as it belongs to the republic or to those who exercise public authority to establish laws and statutes for the common good, so also it sometimes belongs to the same common good to judge the saleable value of things and to express it by price, namely so that the cupidity and frauds of sellers and buyers may be forestalled, and the plundering of the poor prevented² (St. Thomas, II-II, q. 77, a. 2, ad 2; St. Alphonsus, III, 803). Further, the legal price, as the very nature of price indicates, must be observed from commutative justice. Nevertheless it is licit to demand a greater price: 1° if because of changed circumstances it becomes less than just; 2° if the goods to be sold are notably better than usual, because the law is understood about ordinary goods. Besides, the buyer can buy below the legal price, while nevertheless preserving the common price, because the law is judged to have been made in favor of buyers (St. Alphonsus, loc. cit.).

b) If the legal price is lacking, one must stand by the common price - whether highest, lowest, or middle - which prevails in the place where the thing is bought and sold, and which has been constituted independently of fraud, unless nevertheless there is present a special title for selling above the highest or buying below the lowest. It is said:

a) One must stand by the common price, that is, the price which is determined by common estimation; for it belongs to this, and not to private estimation, to judge the saleable value of things and to express it by price. The reason is that the former is less subject to error, while the latter is often blind, deceitful, and perverted by passion, especially if there is question of one's own cause (St. Alphonsus, III, 816).

b) Whether highest, lowest, or middle (p. 600). Nevertheless it is unjust to induce someone by deceit to pay the highest price. Note, however, that often frauds are employed only in appearance, since the things which sellers put forward to commend their goods are commonly regarded as hyperboles and stratagems. Moreover, one who asks a price which exceeds the highest price, for the end that he may receive the common price, even the highest, cannot be accused of sin, provided that he is willing to restore if he receives more than the highest price.

c) Which prevails in the place where the thing is bought and sold. Therefore it is not licit in our region to demand from foreigners or barbarians a price above the highest, although the thing to be sold is held as more precious in their region. But it is licit in their region to acquire a thing, for example a gem, which is esteemed little by them and greatly by us, by granting to them a thing, for example glass, which is esteemed little by us and greatly by them. If the contract is entered into equally in one region and in the other - for example, if a seller who lives in America sells something by telegram to a buyer who is in the Netherlands - the contracting party can choose what pleases him.

d) Which has been constituted independently of fraud; hence they act unjustly who by false reports exaggerate the excellence of some merchandise or business and thus, with common estimation changed, receive a greater price.

Corollary I. One who by private knowledge knows that the price of goods will soon be increased or diminished can, without injustice, buy and sell at the price now current, because the price is not changed by particular knowledge (St. Alphonsus, III, 824). For the same reason it is licit to pay with money whose value someone knows by private information will soon be diminished (cf. St. Thomas, II-II, q. 77, a. 3, ad 4).

Corollary II. A magistrate who by official knowledge knows that the price either of goods or of public bonds will soon be changed can certainly buy or sell them as he has been accustomed to do, since he cannot be of worse condition than others. Besides, it is sufficiently probable that he does not sin against justice or against another virtue by buying up goods at a lesser price with the intention of later selling them at a greater price. The reason is that the office undertaken sufficiently probably does not involve an obligation to abstain from the things mentioned. Nevertheless he would sin against his office by warning others about the price to be changed.

e) Unless a special title is present, etc.; which, lest the order of essential matters be interrupted too much, we shall explain under 4.

c) If things have neither a legal nor a common price - as notable paintings, extraordinary gems, etc. - the conventional price is sufficiently probably valid, or the thing can be bought or sold according to the price about which the contracting parties agree. Many indeed deny this, "because although the price of such things receives a great latitude, it is nevertheless equitable that it should have some assessment according to the judgment of prudent persons" (St. Alphonsus, III, 808). But "when a thing has no price, neither legitimate, that is, assessed by law, nor common, namely according to the common estimation of human beings, that is judged just which is agreed upon" (St. Alphonsus, loc. cit.). The same must be said of some human actions, as if someone exposes his life to danger for the safety of another. Finally, the conventional price is valid: 1° if the buyer alone, or almost alone, knows by private study that the thing is precious; the reason is that not only legal and common price are lacking, but also experts by whose judgment one would have to stand; 2° if each contracting party knows that the price of some thing is unknown to him, because there is had a just aleatory contract (St. Alphonsus, III, 802); 3° according to the authors, the buyer can buy at a conventional price: a) from antiquarians; b) from all those persons whose things have already been destined to vile use, as if a book is being carried to be torn apart or sold for the price of paper. The reason alleged is that things of this kind, by common estimation, have in some way lost their natural price, so that the buyer can proceed broadly. But should not common estimation in the case be called less correct? Besides, as regards antiquarians, there is added that the buyer can reasonably presume a quasi-condonation, because buyers are thus enticed by the hope of buying precious things for a lower price.

4. Titles for departing from the common price,³ that is:

a) For selling above the highest price,⁴ or rather more dearly, are:

a) Emergent damage and ceasing profit (St. Thomas, II-II, q. 77, a. 1; St. Alphonsus, III, 807).

b) The risk of not receiving the price, as was said about mutuum (p. 595; St. Alphonsus, III, 810).

c) Delay of payment, insofar as this brings with it for the seller emergent damage, ceasing profit, or risk of not receiving the price (St. Alphonsus, III, 810). Therefore this title is referred to the titles already assigned.

d) Sale made retail, since it brings with it greater cares and expenses (St. Alphonsus, III, 809).

e) Sale under the hammer (n. 901).

f) The special affection of the seller. "The reason is that deprivation of a thing toward which someone is specially affected is truly estimable by price" (St. Alphonsus, III, 807).

g) Whether the special utility and delight of the buyer are titles is disputed, but with St. Thomas (II-II, q. 77, a. 1) and St. Alphonsus (III, 806) it seems that it must be denied. For first, "if someone is much helped by the thing of another which he has received, but the one who sells is not harmed by lacking that thing, he ought not to sell it above price; because the utility which accrues to the other is not from the seller, but from the condition (or, in another reading, the buying) of the buyer; but no one ought to sell to another what is not his; although he can sell to him the damage which he suffers. Nevertheless, he who is much helped by a thing received from another can of his own accord give something over and above to the seller, which belongs to his honesty" (St. Thomas, loc. cit.). Then, the just price not only can be demanded, but must be paid. Therefore, if the special utility of the buyer changed the account of the just price, the buyer would either have had to increase the price of his own accord, or at least to indicate that utility, so that the seller might be able to use his right of increasing the price. Yet no one would say this; and buyers have recourse to various arts so that this utility may be unknown.⁵ Finally, if the contrary opinion is admitted, it does not appear why the price could not also be increased because of the buyer's necessity without sinning against justice; for necessity argues special utility and increases the value of the thing relative to the buyer equally with utility. Almost all the older authors and several more recent authors follow this opinion,⁶ while other more recent authors contradict it.

Objection. In the supposed case the seller furnishes the buyer an accommodation or benefit, which is estimable by price.

Response. The benefit or accommodation consists either in the action of selling, or in the fact that he sells a thing which will be specially useful to the buyer. Now the action of selling is intrinsic to the sale, and therefore is not estimable by price separately from the thing sold. But the fact that the thing sold is specially useful to the buyer depends on this buyer's condition and circumstances, not on the seller; and the seller cannot receive something for a thing which is not his. If, however, the thing in question is already useful to many, its objective value, and therefore its price, has increased.

b) For buying below the lowest price, or rather at a lower price, are:

a) Emergent damage and ceasing profit by reason of this purchase, if nevertheless it is made in favor of the seller; as if, for his convenience, you buy a thing which you will need only when its price has been diminished. But if you do not buy in favor of the seller, but in your own favor, the reason for denying him the price just per se is lacking, because in reality emergent damage and ceasing profit are not present.

b) Risk of not receiving the merchandise bought and paid for.

c) Anticipation of payment, insofar as this brings with it for the buyer emergent damage, ceasing profit, or risk of not receiving the merchandise. Therefore this title is referred to the titles already assigned.

d) Purchase in a large quantity at once, since it frees the seller from many cares and expenses (St. Alphonsus, III, 809).

e) Purchase in a sale under the hammer (n. 901).

c) A spontaneous offering of goods - whether by a rich man or, as the things to be said seem to prove, by a poor man - insofar as this casts suspicion of a hidden defect, or argues fewness of buyers; for fewness of buyers rather often proves that the value and price of the thing have decreased (p. 600). If, however, the thing is offered spontaneously because of poverty, you will easily sin against charity unless you buy solely in favor of the seller (St. Alphonsus, III, 802).

But it is not licit for a buyer who knows the greater value of a thing to ask from a seller wholly ignorant of the greater value "that he condone what it is worth beyond this; ... because such a donation, since it proceeds from ignorance, is null" (St. Alphonsus, III, 819).

Besides, each should commonly warn the other about an existing legitimate title; nor should he increase or decrease the price more than the title allows, with common estimation considered.

¹ Cf. Janssens, Le juste prix; Hagenauer, Das justum pretium bei Thomas von Aquino; Aengenent, Leerboek der Sociologie, n. 125 sq.

² Billuart, De iure et iustitia, diss. 3, art. 2.

³ Nevertheless do not take these things so strictly, because several of the titles to be explained rather bring it about that the price increases or decreases.

⁴ Vermeersch, De Iustitia, n. 345.

⁵ Vermeersch, loc. cit.; Lehmkuhl, I, n. 1330.

⁶ Vermeersch, loc. cit.; Lehmkuhl, I, n. 1330.

V. Form of the contract. Let the form of the contract be consulted in the Civil Code; there also see what things regard the proof of the contract.

VI. Effects. 1. With only natural law considered, the contract of buying and selling confers on the buyer a right to the thing, since with the execution of the contract a right in the thing is constituted. Sometimes, however, the contract by force of civil law - for example French law - confers a right in the thing.

2. Where the contract without delivery confers a right in the thing, per se the thing sold and not yet delivered is at the risk of the buyer, so that the buyer is bound to pay the price even if the thing has perished. At whose risk the thing sold and not yet delivered is, where the contract confers only a right to the thing, see in the Civil Code.

3. The fruits of a determinate thing sold, not yet delivered, become the buyer's, unless the contracting parties have stipulated otherwise; for the contracting parties are judged to comprehend the accessory, such as fruits are, in the principal (St. Alphonsus, III, 798).

VII. Obligations of the seller. 1. The seller, as regards defects of the thing to be sold, is bound to manifest:

a) Substantial defects, and the defect of a quality to which he perceives the buyer's consent to be bound. For otherwise the contract, because the buyer's consent to the object of the present contract is lacking, is invalid, and therefore the seller cannot accept the agreed price (n. 837; St. Alphonsus, III, 819; cf. St. Thomas, II-II, q. 77, a. 3).

b) A notable and hidden defect. The reason is that a thing is sought by the buyer which lacks a notable defect; this being posited, the seller, by furnishing the thing and not disclosing the defect, tacitly affirms that it lacks such a defect, unless that defect itself is manifest; and therefore he uses deceit and inflicts injury on the buyer. Hence authors generally add that even a notable and manifest defect must be disclosed if it is noticed that the buyer is laboring under invincible ignorance (St. Alphonsus, III, 823). Besides, there must be manifested:

c) A defect about which he is specially questioned, unless the buyer can discover the defect by his own inquiry. The reason is that otherwise buyers would lack a means of inquiring what sort of thing it is concerning which they are going to contract; and this cannot be admitted.

d) Outside the cases assigned there is no obligation of manifesting defects, not even hidden ones; both because otherwise trading would become almost impossible, and because universal custom confirms this.

Corollary I. If some defect can bring damage to the buyer and is not noticed by him, the seller must always - even in a case in which, according to what has been said, he is not held from justice - warn the buyer; as if a horse is furious, or a house ruinous.

Corollary II. The seller, even if he is not bound to manifest a defect, ought nevertheless to take account of the existing defect in establishing the price; if he has not done so, he is bound to restore part of the price received.

Corollary III. A seller who has not manifested defects that had to be manifested is bound, if the contract nevertheless was valid, to restore the excess of price and to reimburse other damages perhaps following from the silence; indeed, if the buyer's error gave cause to the contract, he is bound also to rescind the contract at the buyer's judgment (St. Alphonsus, III, 823).

Corollary IV. "If the seller," says St. Alphonsus with others, "protests that he does not wish to give an account of any defect whatever, but to sell as is commonly said: A sacco d'ossa rotte; then he is bound to nothing. Hence Tamburini deservedly approves the custom which flourishes in some places, especially in great fairs, that animals are sold in this way, even if the defects are most hidden. The reason is that, for removing lawsuits on account of the common good, this can be sufficiently rendered honorable by custom: provided it is understood that the thing is not sold beyond the just price, at least the highest," which the thing has when account is taken of that hidden defect (St. Alphonsus, III, 823). Apply the same to sales by an antiquarian.

Question 1. Whether it is licit to sell a "something for something else," as is said, provided that what is handed over is equivalent to the natural thing, for example to wine, butter, vinegar.

Response. It seems licit, because there is not present a substantial diversity as regards "the end of the buyer" (St. Alphonsus, III, 821). Except: 1° if the buyer manifestly wants the natural thing or a thing of a determinate species; 2° if merchants are held by custom to declare the imitation.

Question 2. Whether it is licit to sell merchandise mixed with cheaper merchandise, provided the just price is retained.

Response. Per se it is illicit. By accident it is licit: 1° if the seller's merchandise is better than usual; 2° if custom so bears. Except if the buyer offers a price greater than usual for this end, that he may certainly receive merchandise not adulterated.

2. The seller is bound to deliver the thing sold to the buyer, who, according to the diversity of civil law, by delivery acquires either a right in the thing and possession, or possession alone. In what way the thing must be delivered is established by civil law; what things must be observed by him or by the buyer as regards the place of delivery, expenses, etc., should be gathered from civil law and from the special stipulations of the contracting parties.

3. The seller is bound to furnish eviction, that is, he is bound to render the buyer unharmed if the thing bought is reclaimed totally or partially by a third party who proves himself to be owner. Hence he is bound to return the price perhaps received.

But what if a seller who proceeded in good faith no longer possesses the price either in itself or in an equivalent?

Response. Most judge that the seller is nevertheless obliged, namely by reason of the contract, whose nature carries this obligation with it. But with St. Alphonsus (III, 800) it seems that it must altogether be denied, because the seller is bound to nothing by reason of the contract, since it is invalid and destitute of all value (n. 894).

VIII. Obligations of the buyer. The buyer is bound to pay the just price, and this at the time and in the mode concerning which agreement was made. Besides, compare civil law. But if he himself perhaps received false money from a third party, he cannot for that reason give it to another contracting party as price. If he has given it, even though he acted in good faith, he is bound to restitution; since the fact that he himself suffers damage is not a reason why you can deny to another what is owed (St. Alphonsus, III, 855).

It remains that we say certain things about earnest money. Now then:

I. Earnest money is called a certain thing handed over to the other party on the occasion of a contract.

II. Earnest money is distinguished as twofold, confirmatory and penitential.

Confirmatory earnest money is that which is given by the buyer to the seller as a sign and confirmation of the contract, perfected according to the intention of the contracting parties. From a contract of this kind, since it is perfected and confirmed, one can retreat without mutual consent even less than from another contract. But the earnest money given is judged to be part of the price.

Penitential earnest money is that which is given by one party to the other for this end, that the contract, not yet plainly perfected, may be rendered more certain. In the case each party can withdraw from the contract, yet in such a way that he who gave the earnest money, if he withdraws, loses the earnest money given; but he who received the earnest money, if he withdraws, restores the earnest money received.

In doubt whether the earnest money is confirmatory or penitential, it is presumed to have been given according to the custom of the place (St. Alphonsus, III, 794).

Besides, also as regards earnest money let civil law be consulted.