Christian Wolff: Natural right 4 - Loans, deposits and mandates

Although Wolff inserted the discussion of money on the pretext that money is required as a measure for trades, he continues with a discussion on contracts, in which, like in donations, a person gives or does something for someone else without receiving anything in return. The list of different types of contracts he considers is not Wolff’s personal invention, but hails from a long tradition of natural law. Indeed, this tradition continued even after Wolff, and we find even Hegel discussing briefly these various types of contract.Thus, going through these various types of contract has its reasons.

Commodatum

Wolff begins with a type of contract where a person concedes a use of an unconsumable thing she owns to another person for free. Thus, if I borrow a lawnmower to my neighbour, this is a case of commodatum, but if I borrow him some eggs, this usually isn’t, since eggs are in most cases used for culinary purposes. Then again, Wolff admits, if I would borrow eggs for my neighbour to show off in a parade, it would be commodatum, since the eggs are not consumed in the process.

Commodatum, like all these types of contracts, is based on the will of the person owning the thing borrowed. Thus, although the situation of the person asking to borrow things would be such that she should be borrowed, there’s no basis why a person not wanting to borrow would have to do this. Furthermore, commodatum remains the property of the owner, and the person to whom the thing is borrowed can only use it for temporary purposes. Specifically, that person cannot borrow the borrowed thing to someone else without a specific permission of the owner. After the use is over, borrowed thing should be returned to the owner. Indeed, if the owner needs the borrowed thing for her own purposes, it should be returned to her at once.

Naturally, if some damage happens to the borrowed thing, the person to whom the the thing was borrowed should cover the damages, if they are caused by her intentionally or through negligence. Then again, if the borrowed thing is already faulty and causes some damage to due to this fault, the owner of the borrowed thing should pay the damages.

A peculiar case of this type of contract is the so-called commodatum duntaxat causa - in effect, borrowing for the sake of the person owning the borrowed thing. The example above would be a case of this sort, if I had borrowed the lawnmower to my neighbour so that he could mow my lawn. This type of commodatum is somewhat different from the more general one, Wolff notices. For instance, if my neighbour is negligent when mowing my lawn and damages my lawnmower, it is actually my fault, since I should have been more careful in choosing a person to mow my lawn. Then again, if my neighbour would have intentionally damaged my lawnmower or if he happened to use it for some other purposes, while the damage happened, he would be obligated to pay the damages.

Mutuum

This type of contract is almost similar to commodatum, but now the borrowed thing is consumable, for instance, when I borrow eggs to my neighbour for him to use in baking. In this case, the very thing borrowed cannot be, of course, returned, but at least a thing of similar type and of same quantity should be returned.

One thing that is often borrowed in mutuum is money, for instance, if I pay my neighbour’s lunch, when he has forgotten his wallet, and he promises to return it the next day. For a loan of money to be a simple mutuum, there should be no interest paid for the loan. Since money comes in different currencies and a specific currency can be, according to Wolff, quantified in two different manners - either through its intrinsic characteristics, like the amount of gold it contains, or through its fluctuating valuation in the market - a mutuum must specify in what manner the loan is to be paid back: should be it of the very same currency and whether it must have the same amount of precious metal or have the same value in relation to other currencies.

Depositum

The name of this type of contract should be familiar from deposit boxes. In effect, in depositum some person agrees to take someone else’s thing into her custody and to guard it for free, for instance, when my neighbour leaves his car for me to watch, while he is on holiday. The ownership of the thing does not transfer to the custodian, who also has no right to use what is deposited. A use of the deposited thing would constitute a theft. Then again, the custodian of the deposited thing can deposit the thing further, that is, find another guardian for the thing she herself was supposed to guard already.

Although the custodian is obligated to guard the deposited thing, the owner has also responsibilities. Specifically, she should be careful in her choice of the custodian, and if she has happened to pick out a negligent person and she could have known this person to be negligent, Wolff insists, then the possible damage is to be blamed on her own negligent choice. Similarly, if the owner wants to end the depositum and asks for her thing back from the custodian, it is the responsibility of the owner to find reliable transportation from the custodian to herself for the thing.

Just like with commodatum, Wolff points out a possibility of depositum duntaxat causa. Here, the phrase means depositing a thing for the custodian, that is, providing her the opportunity to use the deposited thing - for instance, in the case above, my neighbour would have then allowed me to use his care he had entrusted to my care. Depositum duntaxat causa is then something close to commodatum, the difference being that the owner of the deposited thing still has more responsibility of the deposited thing.

Sequestrum

All the contract types dealt with thus far can involve more than one owner. Hence, we might have same thing owned by many persons, which they then decide to borrow to a friend of theirs or give it to this same friend to guard. Quite obviously, the eventual return of the thing is more difficult, because all must get their share, when thing is returned.

A very specific type of depositum with several owners for same thing is sequestrum. Here, the thing is deposited, because there is a lawsuit going on, determining who is the true and sole owner of the thing. Because of its close resemblance to depositum, there is not that much new to say about sequestrum. The most important difference between sequestrum and depositum concerns the time when the custodian must return the deposited thing to its owner. With sequestrum, the thing is to be returned when the controversy about its owner has been solved and the rightful owner has been decided.

Mandatum

While previous types of contracts involved things, mandatum involves actions. In a mandatum, one person asks another to do something in her name and this other person agrees to do it with no charge. Although the action in question could be nearly anything, Wolff clearly thinks mostly cases related to a business deal, for instance, if my neighbour asks me to participate in an auction in order to buy a specific object for him.

An important presupposition of mandatum is that the person mandated to do the deal should not get any profit for the deal arranged - not as a direct wage, of course, but also not through more indirect means, such as arranging a deal with a company one partially owns. In other words, the mandated person must be neutral in relation to the deal being made. Wolff does not deny that even a stakeholder could give council about and lobby for a deal - he just notes that such council doesn’t fulfil the definition of mandatum.

Wolff defines several types of mandatum. For instance, he notes that a mandatum could define very specific instructions, which the mandated person would have to follow to the letter, or it could outline only in broad details the outcome desired and leave the mandated person free to reach this goal by almost any means. In addition to this division, Wolff mentions also that mandatum could be either publicly known or a secret mandate. In the latter case, mandatum should also determine in what instances the mandated person has the right to reveal who the deal is being made for.

An important question in all the types of contract thus far has been who is to account for possible damages. In case of mandatum, it is usually the mandating party who has to be ready to pay something. The mandated person might lose opportunities to work, while doing the business deal, and they might even have to spend some money when contracting the deal, and the mandating party must be ready to account for such expenses. Then again, the mandated part must also account for damages caused by them, for instances, when overstepping the boundaries set by mandatum.

In addition to the basic case, where a person mandates another person, Wolff also considers cases where there are a lot of people mandating the same person for the same task or a lot of people mandated to do the same task by the same person. The important question about such a case is, undoubtedly, how the responsibilities are divided.

Honorarium

Peculiarly, Wolff leaves this type of contract unmentioned in the table of contents, probably because he deals it in the middle of the section about mandatum. The idea itself is rather simple - honorarium means donating money to a person as reward for their freely giving or doing something. In other words, honorarium could be given for such things like commodatum, mutuum, depositum and mandatum. The only restriction is that the person rewarded shouldn’t have done the act for the sake of receiving honorarium - in this case, Wolff says, the apparent honorarium is actually more like a wage paid for the actions.

Fidejussio

Fidejussio is a contract dependent on obligation of another person - a person entering into fidejussio guarantees that if this other person does not fulfil the obligation, the first person will do it. Although again, this obligation could be almost anything, in the most usual case fidejussio concerns a debt. Wolff notes that fidejussio is a contract that requires extreme vigilance in part of the guarantor, because it contains a clear risk of having to pay for mistakes of another. This means that valid fidejussio has strict preconditions - no one can be forced to make a guarantee and the guarantor must understand what is meant to be guaranteed and with what conditions. Furthermore, it is of utmost importance to commit fidejussio into a written form, although even an oral fidejussio is juridically valid.

Fidejussio is also dependent on the original obligation. If the obligation was not valid, then a fidejussio cannot either be. Furthermore, if the obligation is defined to start only at a certain date, fidejussio cannot begin before it. Finally, the guarantor can never be obligated to do more than the original debtor, although fidejussio can determine the guarantor e.g. to pay less of the debt.

Wolff notes that one debt can have many guarantors, and there are two main ways how this could happen. Firstly, all of them might be guarantors in conjunction. In that case, the fidejussio contract might determine who is to pay what - for example, if there is a certain ratio in which different guarantors want to pay the debt. If such a contract does not exist, Wolff says, then the person, to whom the debt should be paid (the creditor), can choose any guarantor. Secondly, guarantors can form ordered successions, that is, guarantors themselves can have their own guarantors. In such a case, naturally, the second guarantor will have to fulfill the obligation only if the original debtor and the first guarantor cannot do it.

Expromissio

Expromissio is a contract resembling fidejussio quite closely. The main difference is that while in fidejussio guarantor must fulfill the obligation only if the original debtor cannot do it, in expromissio the obligation is at once transferred to the new person. Indeed, expromissio releases the original debtor from the obligation completely.