Excursion: Constantine’s Prohibition of Forfeiture Clauses

It may be deduced from a number of texts discussed in this chapter that, despite the fact that in the classical period the pledge enforceable by sale eventually evolved into the normal type of pledge, there seemed to have been a need for parties in the high and late classical period to use a forfeiture clause in practice.

Constantine’s monetary policy

A major factor contributing to rising inflation in the late Roman empire was the monetary policy of successive emperors. The traditional basis of the Roman monetary system was silver coinage.^{[1296] [1297] [1298] [1299] [1300] Under Septimius Severus, the silver denarius only contained fifty per cent of actual silver. Under subsequent emperors, the debasement of the silver coinage continued, with the effect that at the time of Diocletian the denarius had become a coin of silver-plated cop­per/7 The tide changed when Constantine realized that it would be impos­sible to defend the denarius and introduced a new monetary system based on the gold solidus. The exchange value of the solidus was equivalent to its intrin­sic value in gold. The introduction of the solidus in 309 ad has been labelled as one of the few examples of a monetary reform that was successful.88 The solidus became a stable currency and remained so for centuries.}

C. 8.34.3: Constantine’s prohibition of forfeiture

The consequences of Constantine’s monetary reform for inflation were ambiguous. For the elite, whose liquidity was expressed in solidi, it resulted in a stable currency preserving (or even increasing) their wealth. For the poorer classes, which continued to use the existing silver- (or rather: copper-) based currency, Constantine’s monetary reform led to huge increases of prices expressed in bronze and silver-p lated coins, and virtually wiped out their purchasing power/¹ This may have caused lenders to insist on the inclusion of forfeiture clauses in pledge agreements, which borrowers in need of credit were forced to accept. It is this practice which Constantine wished to combat. The prohibition by Constantine is formulated as follows:^{[1301] [1302] [1303] [1304] [1305]}

Const. C. 8.34.3. Quoniam inter alias captiones praecipue commissoriae pignorum legis crescit asperitas, placet infirmari eam et in posterum omnem eius memoriam aboleri. 1. Si quis igitur tali contractu laborat, hac sanctione respiret, quae cum praeteritis praesentia quoque depellit et futura prohibet. creditores enim re amissa iubemus recuperare quod dederunt.

Since, among other frauds, the harshness of the forfeiture clause for pledges has grown conspicuously, it is held that it is void and that all remembrance of it is permanently abolished. If, therefore, anyone is burdened with such a contract, he may recover his breath through the present enactment which invalidates both current and past (agreements) and prohibits future ones.

This constitution is enacted as a general law (ad populum) and drafted in a rhetorical style which is typical for many of Constantine's general constitutions?³ According to Levy, it was part of a much larger legislative reform project?⁴ Forfeiture clauses in pledge agreements are declared null and void with retroactive effect: not only are pledge agreements concluded on or after the date of the constitution affected, but also forfeiture clauses included in con­tracts entered into before that date. The debtor could recover the pledged object from the creditor, even if the creditor had already acquired its owner­ship through forfeiture?⁵ Although Constantine's constitution did provide protection to debtors as structurally weaker parties, it still was rather creditor­friendly. Constantine's decree merely led to partial nullity: only the forfeiture clause itself was null and void. The right of pledge itself continued to be valid, and the creditor could remain in possession of the pledged property. If a debtor who invoked the nullity of a forfeiture clause failed to repay the secured debt, then the creditor did not have to return the pledged object and could sell it to a third party by way of execution?⁶ The effect of Constantine's constitution is similar to that of Alexander Severus's constitution of 222 ad (C. 8.34.1): the creditor's right of forfeiture is replaced with a default-based statutory right to sell the pledged object to third parties.

Justinian law and ius commune

Constantine's prohibition has been maintained in the Corpus iuris civilis. As such, it has had a major impact on the European ius commune and the codifications based thereon.^[1306] It is remarkable, however, that despite the Constantinian prohibition, the majority of classical texts discussed in this chapter, in particular Marci. D. 20.1.16.9 (purchase at a fair price), have been retained by Justinian.