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Freedom of Contract: Roman Law

by Dr Carlos Bugeja – Senior Associate

Parties to a contract are free to choose the terms which govern their rights and obligations in terms of their values and preferences, and what is agreed between them would then generally find the backing of the law.

This autonomy is what is more broadly known as the principle of ‘Freedom of Contract’.

Maltese law embraces this principle and protects it (with some exceptions).

Many of the principles of Maltese civil law find their origin in the Roman system of contract.

The question is: can it be said that the concept of Freedom of Contract originated from Roman Law?

Under Roman law, freedom was also a dearly held concept.

To the Romans however, freedom never meant to do what one pleased, or to live according to one’s wishes, free from any restriction.

One must analyse freedom from the Roman perspective within the context of slavery; first and foremost, the ultimate freedom was the absence of a dominus, a master who deprived one’s rights of self-determination. An individual who was not a slave was deemed free, however within that liberty, there existed degrees of libertas.

Initially, ownership was very wide; both real and personal property could be freely alienated and divided. For instance, in contracts of sale and hire, there was no notion of ‘just price’. This is clearly laid out in the Digest:

Just as in the contract of sale it is naturally permitted to buy for less what is worth more and to sell for more what is worth less, and thus to take advantage of one another, so that the law in the case of hire.

Likewise, Pomponius says with regard to the prices in sale that the contracting parties are naturally permitted to take advantage of one another.

In time, this Roman principle of liberty led to extreme individualism in the domain of private law, and gradually, the need was felt to introduce more restrictions. This need was already expressed earlier in one of Pliny’s Epistulae (Letters), when replying to a question as to how best to endow one of the municipalities with a sum be used for an annual fest: ‘If you give them money, it will be squandered; if you give them lands, they will be mismanaged’.

In fact, we find that by the pre-classic era, limitations to the right of disposal were being introduced, though few and far in between. For instance, 204 BC saw the passing of Lex Cincia, intended to restrict compensation due to lawyers for pleading a case and to prevent foolish and hasty gifts of a large amount.

Whilst by the classical imperial period, restrictions to freedom of contract were constantly on the increase, evidently however, the Romans had not yet completely given up the principle of the sanctity of the contract. A text dating 215 AD (the later classical period), states that: ‘Cum te propter turpem causam contra disciplinam temporum meorum domum adversariae dedisse profitearis, frustra eam restitui tibi desideras, cum in pari causa possessoris melior condicio habeatur’ (‘You allege – the Emperor writes to a certain Longinus – that you conveyed a house on the basis of an immoral cause, in breach of the standards of my times, to the woman whom you are now suing; in vain therefore do you desire to have it restored to you, since where the guilt is common to both parties, the possessor’s position is held to be stronger’).

This text can be understood to mean that whilst the immorality (the nature of which is not revealed in the text) of the alienation is acknowledged and frowned upon, it did not give Longinus a right of recourse. Here one can notice a relatively novel approach: a party to a contract cannot invoke the absence of iusta causa to invalidate it if that unjust cause was brought about by himself. It would seem that this approach was taken for two reasons: (i) as a form of penalty on the party engaging in immoral conduct; and (ii) to deter individuals from unfairly abusing of legal restrictions to contract to gain undue advantage on others.

Eventually, post-classic law increased the number of restrictions and even acknowledged the restrictive effect of acts-in-the-law prohibiting disposal. This can best be seen in the introduction of the principle of laesio enormis, which allowed a seller of land to rescind the contract if the sale price was less the half the just or true price, unless the buyer opted to pay the difference.

It is evident that Roman law was characterised by ‘paternalistic concerns’ leading to the introduction of restrictive rules in alienation of property (a substantial part of contract).

Paternalistic laws were therefore a ubiquitous part of Roman framework of laws and as a result, it cannot really be said that freedom of contract entered the western legal systems through Roman law.

The influence of the Church and of Western philosophers in the doctrine of freedom of contract is however fairly evident.

This will be analysed in the second part of this article, to be published in the coming weeks.

Disclaimer: This article is not to be considered as legal advice, and is not to be acted on as such. Should you require further information or legal assistance, please do not hesitate to contact Dr Carlos Bugeja on carlos@abalegal.eu.