Christian History and General Contracts (Part 1)

Law historian Harold J. Berman in one of his final essays before his death last year examined two streams of the Christian sources of general contract law: medieval canon law and Puritan covenant law.

In medieval canon law, contracts were conceived as having two sides to them: 1) the obligation of an oath before God and 2) legal liability conceived as protecting the rights of the obligee. Since the promise was understood as made ultimately to God, it created an obligation to the Church, too; thus, ecclesiastical courts could become involved. This created a further question: what makes a morally obligatory promise also legally binding? 11th century canon jurists concluded that it must be reasonable and equitable, and they offered a number of factors as to how this could be determined:

• even an informal promise could be legally binding provided it was fair and equitable;
• no fraud was involved by either party;
• no duress was involved against both or either party;
• neither party was mistaken concerning the circumstances of the pledge;
• no silence had given rise to mistaken inferences;
• no third-party beneficiary's rights were impinged;
• the contract was subject to reformation in the light of justice;
• that good faith was present in the construction, interpretation, and execution of the contract;
• in dubis pro debitore: the laws are to be applied in favor of the debtor;
• that the contract is not otherwise unconscionable.

Berman cites as an example the distinction canon law made between normal profit-making and nominal interest charges and shameful price-gauging and usury (i.e. excessive interest). He concludes:

Our modern Western contract law did not start from the proposition that every individual has a moral right to dispose of his property by means of making promises, and that in the interest of justice a promise should be legally enforced unless it offends reason or public policy. Our contract law started, on the contrary, from the theory that a promise created an obligation to God, and that for the salvation of souls God instituted the ecclesiastical and secular courts with the task, in part, of enforcing contractual obligations to the extent that such obligations are just.