RECIPROCITY OF RIGHTS
The principle of reciprocity of rights was at the heart of the new system of mercantile law that emerged in the late eleventh and twelfth centuries. Of course, reciprocity itself, in the sense of mutual give-andtake, has been at the heart of all commerce, in all civilizations, insofar as all commerce involves the exchange of burdens or benefits on the part of those engaged in commercial transactions.
The seller parts with the goods and the buyer parts with his money; the lender advances funds and the borrower binds himself to repay what was advanced plus an additional sum; the carrier undertakes to transport the goods and the seller or the buyer undertakes to pay the freight. Each makes a sacrifice, and both expect to be better off as a result. Yet the principle of reciprocity of rights, as it has been understood in the West since the late eleventh and early twelfth centuries, involves something more than mere exchange: it involves, ideally, the element of equality of burdens or benefits as between the parties to the transaction -- the element, that is, of fairness of the exchange. This, in turn, has two aspects, one procedural, the other substantive. Procedurally, the exchange must be entered into fairly, that is, without duress or fraud or other abuse of the will or knowledge of either party. Substantively, even an exchange which is entered into willingly and knowingly must not impose on either side costs that are excessively disproportionate to the benefits to be obtained; nor may such an exchange be unduly disadvantageous to third parties or to society generally.Both the procedural and the substantive aspects of reciprocity of rights are implied in the very term "rights" as it has been understood in the West since the late eleventh century. Rights are necessarily viewed as part of a whole legal system. They derive their character from the purposes of that system.
Those purposes include some protection, at least, against some kinds of unfairness in commercial exchanges.The principle of procedural reciprocity was highly developed in the jurisprudence that accompanied the Papal Revolution. The canon law, in particular, stressed principles of equity in contract formation. As a
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pledge of faith gave the ecclesiastical courts jurisdiction over contracts, so good faith (bona fides) was itself a necessary test of the sanctity of the contractual undertaking. In canon law, concepts of fraud, duress, and mistake were fashioned into a complex theory which, on the one hand, supported the freedom of the parties to make binding promises but, on the other hand, protected them against sharp practices. Above all, the formalism of oaths, which had dominated the Germanic folklaw, was subjected to correcting influences. In contrast both to Germanic law and to the preexisting Roman law, the new canon law, supported by the new Romanist legal science, not only enforced informal oral agreements but also refused to enforce the most formal agreements (under oath or in writing under seal) if entered into as a result of deception or even of a misunderstanding for which the promisor was not responsible. These principles were taken over, with some modifications, by the new system of mercantile law. They reflected the principle of procedural reciprocity of rights in contract formation.
The principle of substantive reciprocity of rights, though less highly developed, was reflected in the canonists' doctrines of usury and the just price. 23 Many subtle qualifications were introduced into these doctrines in order to accommodate them to commercial needs. Lawful interest was permitted. A lawful profit was not unjust. Nevertheless, the merchants often resisted the attempts of the canonists to regulate mercantile practices, and especially their assertion of ecclesiastical jurisdiction in mercantile cases. A late example, but one that is also characteristic of the period between the late eleventh century and the early thirteenth, is a decree issued in 1369 by the Doge and Council of Aldermen of the city of Genoa imposing a substantial fine on any person who had recourse to an ecclesiastical or other court on the ground that a commercial contract which he had entered into, such as a contract of insurance or exchange of currency, was usurious or against canon law or otherwise illegal.
24The conflict between merchants and ecclesiastics over the applicability of canon law to commercial contracts did not reflect any fundamental difference of opinion concerning the subordination of freedom of contract to moral considerations. The merchants did not believe in the right of the individual to enrich himself at will. Although they did not think that commercial activity should be bound to the moral standards of monastic life, they did not deny that it was subject to the principle of the just price, the law of usury, and other similar protections against oppressive or immoral agreements. Nor did they contest the supremacy of the church in matters of morals. Yet they insisted on their own relative autonomy in matters of commercial law; and in theory, at least, the church did not deny them that autonomy. Therefore their formulations might differ from ecclesiastical formulations, just as their jurisdiction might differ from ecclesiastical jurisdiction -- and each of the different
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formulations might be valid, just as each of the jurisdictions might be valid. This was the scholastic dialectic in action. The mercantile community had its own law, the lex mercatoria, just as the church had its own law, the jus canonicum. The merchants were, of course, members of the church and hence subject to the canon law, but they were also members of the mercantile community and hence subject to the law merchant. When the two bodies of law conflicted, it might not be clear which of the two should prevail. Both might be right. Only time could mediate the conflict.
Thus procedural and substantive reciprocity of rights, invoked by both merchants and ecclesiastics, must be seen not as an abstract principle but as a principle enunciated and implemented within specific communities. The merchants constituted a self-governing community, divided into religious brotherhoods, guilds, and other associations. From that historical fact are derived all the characteristics of the new system of mercantile law-its objectivity, universality, reciprocity of rights, participatory adjudication, integration, and growth.