Aquinas on fraudulent dealing
Source: Aquinas Ethicus: or, the Moral Teaching of St. Thomas. A Translation of the Principal Portions of the Second part of the Summa Theologica, with Notes by Joseph Rickaby, S.J. (London: Burns and Oates, 1892). Vol. 2.
Article I.—May one lawfully sell a thing for more than it is worth?
R. To use fraud to sell a thing above its just price is a downright sin, being the deceiving of another to his loss. Fraud apart, we may speak of buying and selling in two ways. In one way ordinarily; and in that way we see that the institution of buying and selling is for the common good of both parties, each party wanting what the other has got. Now a transaction designed for the common advantage of both, should not bear harder upon the one party than upon the other; and therefore the contract between them should proceed on the principle of equality of thing to thing. Now the quantity of a thing that serves human use is measured according to the price given for it; for which purpose we have the invention of money. And therefore, if either the price exceeds the quantity of the value of the thing, or conversely the thing exceeds the price, the equality of justice will be destroyed. And therefore to sell a thing dearer or buy it cheaper than it is worth, is a proceeding in itself unjust and unlawful.
In another way we may speak of buying and selling, inasmuch as incidentally the transaction tends to the utility of one party and to the detriment of the other, as when one has great need to have a thing and the other suffers by parting with it. In such a case the just price will be arrived at by regarding not only the thing that is sold, but also the loss which the seller incurs by the sale. And thus there will be an opening for the thing being lawfully sold for more than it is worth ordinarily and in itself, though not for more than it is worth to its possessor.1 But if one party is much benefited by the commodity which he receives of the other, while the other, the seller, is not a loser by going without the article, no extra price must be put on. The reason is, because the profit that accrues to the one party is not from the seller, but from the condition of the buyer. Now no one ought to sell to another that which is not his, though he may sell the loss that he suffers. He however who is much benefited by the commodity which he receives of another, may spontaneously bestow some extra recompense on the seller; that is the part of one who has the feelings of a gentleman.2
Article II.—Is a sale rendered unlawful by a defect in the thing sold?
R. We may consider three defects in a thing that is sold. One in kind. Such a defect, if known to the vendor, amounts to a fraud in the sale, and renders the sale unlawful. And this is what is said against certain persons: “Thy silver is turned into dross, thy wine is mingled with water;”1 for what is mingled with anything else suffers a defect in kind. Another defect is in quantity, which is known by measure. And therefore if one knowingly uses short measure in selling, he commits a fraud, and the sale is unlawful. Hence it is said: “Thou shalt not have divers weights in thy bag, a greater and a less.”2 The third defect is in quality, as if one were to sell a sickly animal for a healthy one. If one knowingly does this, he commits a fraud that renders the sale unlawful. And in all such cases the vendor not only sins by effecting an unjust sale, but is bound to restitution. But if any of the aforementioned defects be in the article sold without the seller knowing of it, he is guiltless of sin; because, though what he does is unjust materially, yet his doing of it is not unjust: at the same time he is bound, when the fact comes to his knowledge, to make up the loss to the buyer. And what is said of the seller, is to be understood of the buyer also. For sometimes the seller believes his article to be less precious in kind than it really is, as when one sells gold for brass; and then the buyer, if he observes it, buys unjustly, and is bound to restitution. And the same of defects of quality and quantity.
Article III.—Is the seller bound to mention any flaw there is in the thing sold?
R. It is always unlawful to furnish to another an occasion of danger or loss, albeit it is not necessary for a man always to lend his aid or advice to the advantage of his neighbour. That is necessary only in definite cases, when you have the person under your care, or when relief for him is impossible otherwise than through you. Now the seller furnishes the buyer with an occasion of loss or danger by the fact of offering him a spoilt article: of loss, if the article offered for sale is of less value on account of such a flaw, while he abates nothing of the price on that account: of danger, if the flaw renders the use of the thing awkward or hurtful. Hence if there are secret flaws of this nature, and the vendor does not reveal them, he drives an unlawful and treacherous bargain, and is bound to compensate the purchaser for his loss. But if the flaw is manifest, as when a horse has only got one eye, or when the use of the thing, though not available to the vendor, is still available for others; and when the vendor in his price makes due abatement for the flaw; then he is not bound to declare the flaw, because on account of it perhaps the buyer would wish more to be taken off from the price than ought to be taken off: hence the seller can lawfully provide for his own indemnity by reticence as to the flaw in the article.
§ 1. A judgment cannot be made except of a manifest case: for every man judges according as he knows. Hence if the flaws in a thing exposed for sale are secret, judgment is not sufficiently left to the purchaser unless they are declared to him. The case would be otherwise if the flaws were manifest of themselves.
§ 2. To the objection taken from Cicero: “What so absurd as for the auctioneer to give out by command of the owner, Insanitary house for sale?”—it is to be said that a man need not make known the flaw in his wares by means of the auctioneer, because by such an announcement purchasers would be deterred from buying, not knowing the other points of the article, wherein it is truly good and useful. But the flaw in the thing must be told privately to the person who draws near to purchase it, when he is in a position to compare all the points of the thing together, good and bad. For what is faulty on one point may be useful on many others.
§ 4. To the objection, that a seller carrying corn to a place where there is a scarcity of corn, though he knows that many are coming after him similarly freighted, still is not bound to tell,—it is to be said that a flaw in a thing makes the thing here and now of less value than it appears; but in the case above mentioned the fall in value looked for is a matter of futurity: hence the seller who sells the thing according to the price that he finds, does not seem to be acting against justice in making no statement as to the future. If however he were to make a statement, or to abate something of the price, he would show a more exuberant virtue, though he does not seem to be bound thereto by any duty of justice.
Article IV.—Is it lawful in trade to sell an article at more than cost price?
R. It belongs to traders to be occupied with the exchange of commodities. But exchange is twofold: one form natural and necessary, either an exchange in kind, of commodity for commodity, or an exchange of a commodity for money, but in any case having for motive the necessity of living; and such an exchange does not belong to trade, but to domestic economy or to statesmanship, to the art in fact of providing a family or a State with the necessaries of life. There is another species of exchange, either of money for money, or of any sort of goods for money, the object here being not the necessaries of life, but gain; and this trade seems properly to belong to traders. Now the former exchange is praiseworthy, as ministering to a natural want: but the latter is justly blamed, because so far as in it lies it ministers to the greed of gain, which knows no bounds, but tends to go to all lengths. And therefore trade, considered in itself, contains a certain unseemliness, inasmuch as it does not essentially involve any honourable or necessary end. Still though gain, which is the end of trade, does not essentially involve anything honourable or necessary, neither does it essentially involve any element of vice, or aught that is opposed to virtue. Hence there is nothing to hinder gain from being referred to an end necessary or even honourable. And thus trade will be rendered lawful: as when one refers the moderate gain that he seeks from trade to the sustenance of his family, or to the relief of the distressed; or once more, when one applies to trade on behalf of the public interest, that the necessaries of life may not be wanting to his country, and seeks gain, not as an end, but as the wages of his labour.1
§ 2. It is not every one that sells a thing for more than he bought it for that trades, but he only who buys on purpose to sell dearer. But if one buys a thing, not to sell but to keep, and afterwards for some reason wishes to sell it, that is not trading, although he sells it dearer. For he may lawfully do this, either because he has improved the thing in some respect, or because the price of the thing has changed by diversity of place or time, or on account of the risk to which he exposes himself in carrying the thing from place to place, or causing it to be carried. And in this way neither the purchase nor the sale is unjust.
§ 3. Clerics ought to abstain, not only from things in themselves evil, but also from things that have the appearance of evil. And this observation applies to trade, both because it refers to earthly gain, of which the clergy ought to be despisers, as also because of the vices frequently found in persons engaged in trade, because “a merchant is hardly free from sins of the lips.1 There is also another reason, because trade too much entangles the soul in secular cares, and withdraws from spirituality; hence the Apostle says: “No man being a soldier to God, entangleth himself with secular business.”2
[1 ]We should phrase it, for more than its market-value, though not for more than its use-value to the seller in this instance. The counter-principle next laid down by St. Thomas, that no charge beyond the market-value must be made for any special use-value that the article has to the purchaser, is the principle that fixes the guilt of usury. It is a principle of prime importance in commercial morality. (Trl.)
[2 ]It would be a different thing, if not one solitary individual, but a whole community were in special need of, or had set up a special demand for, the commodity. That would raise its market-value: and so far as mere justice goes, you may always sell at market-value. See below, art. iii. § 4. (Trl.)
[1 ]Isaias i. 22.
[2 ]Deut. xxv. 13.
[1 ]In this very lukewarm appreciation of the benefits of trade St. Thomas is inspired by Aristotle, Politics, I. 9. The upshot after all seems to come to no more than this, that a man in business ought not to make it his supreme and sovereign aim to secure “a pot of money” for himself; but should be accessible to considerations of the good of humanity, and of the civic community to which he belongs; a doctrine surely which needs inculcating even more now than in the days of St. Thomas. (Trl.)
[1 ]Ecclus. xxvi. 28.
[2 ]2 Timothy ii. 4.