Introduction
In societies with a ‘Naturalwirtschaft’ (subsistence economy) and an archaic legal system, the object given as collateral usually serves as an alternative to the performance promised by the debtor (substitution pledge).
If the debtor fails to pay the secured debt, the creditor acquires unconditional ownership of the collateral instead. Roman law was no exception (section 5.2). There was originally no duty for the creditor to sell the charged property in public, nor was he obliged to account for the surplus where the value of the charged property exceeded the amount of the secured debt. This may have been a relic of the archaic idea of forfeiture as a penalty for the failure to repay the secured debt. The downside for creditors was that forfeiture of the charged property would extinguish the secured debt, also where the value of the charged property was less. In a monetary economy, such as the Roman economy of the Principate, the enforcement of a pledge by way of sale achieves a much more finely tuned method of execution than forfeiture.[537] In such an economy, lenders are normally not interested in obtaining ownership of the charged object as such: they want to liquidate it as soon as possible, in order to be able to take recourse against the proceeds and satisfy their claims. In case of a shortfall they want to recover it from the debtor, while the latter would like to lay his hands on any surplus proceeds. In the Sulpicii archive there is a document evidencing a transactional practice in the first century ad purporting to achieve this: TPSulp 79 (section 5.3). In addition to a licence to sell, TPSulp 79 also contains an express provision that any surplus of the proceeds of a sale (superfluum) would be paid to the debtor, while the debtor would remain liable for any deficit (reliquum): the ‘surplus/deficit clause' (section 5.4). This transactional practice can be regarded as the common ancestor of the pledges enforceable by sale in modern civil law jurisdictions. The express licence to sell may, in addition, also have had the purpose of specifying the modalities of an execution sale: time, place, and price (section 5.5).[538]In the second century ad, pignus and hypotheca evolved to be true security interests. Although in the first decades of this century the creditor's power of sale may still have been based upon forfeiture (section 5.6), it came to be regarded as a power to alienate someone else's (i.e., the debtor's) property (section 5.7). The right of pledge attributed preferential rights of recourse to the creditor for exactly the amount of the secured debt: nothing more, nothing less. What had started as a transactional practice in the first century AD (or before)—the licence to sell coupled with the surplus/deficit clause—evolved in the second century ad into a rule of law. This evolution from Verfallpfand (forfeiture) to Verkaufspfand (sale) set new evolutionary processes in motion which ultimately led to the differentiated and versatile security interest that pignus was to become in high and late classical law.
5.2
More on the topic Introduction:
- Domingo Rafael. Roman Law: An Introduction. Routledge,2018. — 252 p., 2018
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- Nicholas Barry, Metzger Ernest. An Introduction to Roman Law. Oxford University Press,1976. — 317 p., 1976
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