(b) When the derider makes light of an evil that is really light, there is no contempt shown, but there may be serious embarrassment caused to the person derided. For the peace of a good conscience is a great blessing (“Our glory is this, the testimony of our conscience,” II Cor., i. 12; “A secure mind is like a continual feast,” Prov., xv. 15), and that which disturbs it can be a serious distress and harm. If the butt of the joke does not take the matter much to heart, the sin is venial. But should he suffer great mental pain or disturbance on account of the ridicule, the quality of the sin is disputed. Some think that mortal sin is committed, if the derider foresees the serious evil that will ensue; but others hold that the sin is venial, since it is the over-sensitiveness of the person derided that accounts for his great discomfiture of mind.
2110. The gravity of the sin of derision is increased by the object against whom it is directed; for the greater the reverence due a person, the greater the injury shown by making a mockery of him.
(a) Thus, the worst form of derision is that which is directed against God, and it is not distinct from blasphemy. Hence, Isaias (IV Kings, xix. 6) calls the deriders of the God of Israel blasphemers, and St. Luke (xxii. 64, 65) says that the soldiers who gave Our Lord a mock coronation spoke in blasphemy.
(b) Next in gravity is derision of parents, and Scripture declares the special horror of this sin: “The eye that mocketh at his father, let the ravens of the brooks pick it out and the young eagles eat it” (Prov., xxx, 17).
(c) Finally, there is a special enormity in derision of saintly persons, for virtue deserves honor, and those who dishonor it deter men, as far as in them lies, from cultivating or esteeming it.
2111. Cursing.—Cursing in general is the speaking of evil for some person or thing, that is, in order that the evil spoken may befall him or it. Thus, it differs from contumely and derision, which are the speaking of evil to another, and from defamation and whispering, which are the speaking of evil against another. Cursing is also different from prediction of evil, and some passages in the Imprecatory Psalms, though couched in terms of malediction, are prophecies of the future, rather than curses. An example is Psalm cviii, which foretells the fate of the traitor Judas. Cursing is expressed in two ways:
(a) imperatively, when one pronounces with authority that punishment is to be inflicted or evil visited upon some person or object. In this way God decrees eternal or temporal penalties against sinners, judges sentence criminals, and the Church anathematize the contumacious;
(b) optatively, when one who has not the power or authority to command punishment, expresses the wish that misfortune or evil of some kind may overtake a person or thing. Examples are: “Bad luck to you,” “May you break your leg,” “The devil take you,” “God damn you.” A curse made in the form of a prayer is called an imprecation.
2112. When Cursing Is Not Sinful.—Cursing a person is not sinful when the evil which is ordered or wished is not intended as to the evil that is in it, but as to some good; for so the intention is directed to good, not to evil.
(a) Thus, evil may be ordered on account of the good of justice that is in it, as when a judge decrees capital punishment, which in its physical being is an evil, but morally is the vindication of justice and therefore a good. Some of the curses made by holy men in the Bible are of this character: they proclaim the just sentence of God, as when Elias called down fire from heaven upon his persecutors (IV Kings, i), and Eliseus cursed the boys that mocked him (IV Kings, ii. 24); or they express the submission of the human will to the just decree of God: “And the Levites shall pronounce with a loud voice, ‘Cursed be he that abideth not in the words of this law,’ and all the people shall say, ‘Amen’” (Deut., xxvii. 14, 26).
(b) Evil may be desired, if the intention takes in only the good of public or of private utility that is contained in it, as when one hopes a jury will find a dangerous criminal guilty, if one has in view, not the sufferings or death of the criminal, but the safety of the community. It is right, therefore, to wish confusion and defeat to the enemies of religion, of the Church, or of one’s country; it is lawful to pray God to visit a sinner with sickness that he may thereby be reformed or prevented from harming others. But in wishing evils one must remember that it is not always lawful to do what one wishes may happen in some lawful manner, nor is it lawful to wish a greater evil as a means of escape from a lesser evil (see 1308 sqq.).
2113. Sinfulness of Cursing.—Cursing a person is sinful when the evil ordered or wished is intended precisely as it is the hurt or loss of this person.
(a) From its nature this sin is mortal, since it shuts out the curser from heaven (“Neither cursers nor extortioners shall possess the kingdom of God,” I Cor., vi. 10), and it is essentially opposed to charity, being the natural expression of hatred (see 1296). But, other things being equal, optative cursing is less serious than defamation, for it is less harm to another to wish him evil (e.g., that he be defamed) than to inflict that evil on him.
(b) From the imperfection of the act or the lightness of the matter, cursing becomes at times a venial sin. The act is imperfectly deliberate when one curses in a sudden fit of temper; it is imperfectly intentional, when one curses in fun or from habit and does not really wish that the evils pronounced should be fulfilled. The curses, “Go to hell,” “God damn you,” are usually not meant or understood to express a wish that the person addressed be consigned to eternal punishment. Hence, they are generally in themselves venial sins only. But it should be remembered that venial curses of this kind may become mortal by reason of scandal (e.g., when parents habitually address such curses to their children, or other superiors to their subordinates), or by reason of irreverence (e.g., when children curse their parents). The matter of a curse is light when the evil spoken is harmful only in a small degree (e.g., to wish that a person may lose a small sum of money).
2114. Rules for Deciding as to Gravity of the Sin.—Persons who have expressed a grave curse against a neighbor are sometimes in doubt whether there was enough ill-will in the curse to make it a mortal sin. For such doubts theologians give the following rules:
(a) if the reason for doubting is that after the curse one cooled off and hoped that no evil would happen to one’s neighbor, mortal sin was committed during the curse, but the bad disposition quickly passed away;
(b) if the reason for doubting is that one is not sure about the state of mind one was in during the curse, a good index of that state of mind will be the feeling one has towards the person who was cursed. Thus, if one is well disposed towards that person, the presumption is that the curse was not meant except as an expression of anger; but if one is hostile to that person, the presumption is rather that the evil in the curse was really intended. If one is indifferent as regards the person whom one cursed, the presumption will follow what one is accustomed to desire in one’s curses, whether that be to give forceful expression to displeasure or to manifest a malevolent hatred.
2115. Circumstances Which Change the Moral Species of Cursing.—There are certain circumstances of person and objects which change the moral species of cursing, and which must therefore be mentioned in confession.
(a) Thus, by reason of difference in the persons cursed the species is changed, for where special love or reverence is owed a special sin is committed by hatred or irreverence. The gravest curse is that against God, which is the sin of blasphemy (see 887 sqq.). Next in wickedness is the curse against one’s parents, which is a sin of impiety.
(b) By reason of difference in the evils that are desired, the species is also changed, since the essential malices of the will and of the deed are the same (see 90, 242). In this respect cursing differs from contumely and detraction, for in these sins the evils spoken are not pleasing, but rather displeasing to the speaker (see 2103). Hence, he who wishes death to his neighbor commits murder in his heart, he who wishes loss of property is a thief at heart, etc. But if one curses a neighbor in a general way, without mentioning any particular evil, one sins by hatred.
2116. Numerical Multiplication in Sins of Cursing.—(a) By reason of the specific difference in the evils wished (e.g., death, disgrace, poverty), one is guilty of several sins by one and the same act; for, though the act is physically one, it is morally many, as was said in the previous paragraph. But some authors add that only one sin is committed if all the evils wished are united in the mind as expressions of the one sin of hate or as means of the one purpose of injury (see 217).
(b) By reason of the different persons cursed, one is also guilty of several sins by one and the same act, or at least is guilty of one sin that is equivalent to many; for he who curses a whole family or group, formally and expressly intends evil to each member, and thus he differs from a thief who steals from many persons, but does not will individual injuries (see 218).
2117. The Cursing of Evil.—(a) It is not sinful to curse evil as such, that is, to wish that sin or wrong may be defeated. Hence, it is lawful to pray against the evil spirits, the enemies of God and man. But it is sinful to curse any creature of God, even though he is among the lost, for the nature of every creature is good, since it comes from God.
(b) It is not sinful to curse evil tropologically, that is, to curse a creature of God that is taken to represent evil, as being its cause (e.g., Job cursed the day of his birth, the beginning of many evils), or location (e.g., David cursed Mount Gelboe, the spot where Saul and Jonathan were slain), etc. But it would be a sin to curse these creatures of God in themselves.
2118. It is not sinful to curse an irrational creature on account of its relation to man, if there is a sufficient reason to curse man himself (see 2112), either on account of the good of justice (e.g., when God cursed the earth as a punishment on Adam, when Christ cursed the fig-tree as a sign of the curse on Judea), or on account of the good of utility (e.g., when one wishes that the liquor ordered by a drunkard may be lost).
2119. Unlawful Cursing of an Irrational Creature.—(a) It is unlawful to curse an irrational creature, considered precisely as a creature of God, for in so doing one reflects on God Himself, and incurs the guilt of blasphemy.
(b) It is unlawful to curse an irrational creature, considered precisely in relation to man, if there is no just cause to curse man. Thus, if one wishes that a neighbor’s cattle may die, intending only the harm that will be done the neighbor, one is guilty of sinful cursing (see 2113).
(c) It is unlawful to curse an irrational creature, considered precisely in itself, for such an act is vain and useless. Those who curse the inclemency of the weather, the infertility of the soil, the stubbornness of mules or other animals, the uselessness of a tool, etc., do not generally speaking commit a grave sin, since they intend only to voice their impatience with conditions that are displeasing.
2120. Murmuring.—Murmuring is the expression of unjust discontent or complaint by inarticulate sounds or by secret words.
(a) It is unjust, and so it does not differ essentially from the sins of speech given above. If it is an injustice to honor, it is reducible to contumely; if it is an injury to fame, it pertains to defamation, etc. The injustice of murmuring results either from the thing complained of (e.g., a child murmurs against the just orders of its parents), or from the manner of the complaint (e.g., a subordinate complains against an unjust order, but angrily, contemptuously, or uselessly).
(b) It is made by inarticulate sounds (e.g., by whistling, grunting), or by secret words (e.g., in whispered, inaudible manner). This is an accidental difference between murmuring and other vocal sins.
2121. Fraud.—Having discussed the various kinds of injustice that are committed in involuntary commutations, we now pass on to the study of those injustices that are done in voluntary transactions (see 1748). These vices can be reduced to the following:
(a) injustices perpetrated against a person who is entirely unwilling (viz., theft and robbery), as when one steals an object that had been entrusted to one as a pledge or loan, or compels another, by fear or violence, to sign a contract unfavorable to himself and which he does not wish to agree to. It is unnecessary to speak of theft and robbery in contracts, since the same principles apply to them as to theft and robbery outside of contracts (see 1890 sqq.);
(b) injustices perpetrated against a person who is partly willing, since he consents to a contract, but is also partly unwilling, since unfairness or fraud is used against him. These injuries are of two general kinds: fraud, a sin committed in buying and selling and other contracts in which payment is made for some valuable consideration; usury, a sin committed in the loan of money in which payment is made for something that is nonexistent.
2122. Definition of Fraud.—By fraud (see 1677-1679) we here understand any unlawful conduct on the part of one party to a contract that puts the other party under a disadvantage in agreeing to the contract (e.g., misrepresentations about the excellence of merchandise), or that takes away the equality that should exist between the parties (e.g., an excessive price charged for merchandise; see 1750). The contract of sale is the type of all onerous contracts (see 1749), and to it all the others, whether certain or aleatory, can be reduced, for in every one of them there is a thing that is purchased (e.g., in aleatory contracts the hope of securing some prize), and a price that is paid for the object of purchase. Hence, it will suffice to speak of the frauds that are committed in sales, and the same principles that govern these can be applied to other kinds of contract.
2123. Two Kinds of Injustices in Sales.—Equality between the buyer and the seller requires that each give the other a good equivalent for what he receives. Hence, the injustices committed in sales are reducible to two kinds: (a) injustices in the prices charged or paid; (b) injustices as to the goods furnished or taken.
2124. Injustice Regarding the Price.—Sin is committed in reference to the price charged as follows:
(a) by fraud, when one of the parties uses deception against the other party in order to charge more or pay less than is fair; for one who is party to a contract has the right that no lying or trickery be used against him, a contract being an agreement to which knowledge and consent are requisite;
(b) by overcharge or underpayment; for sale has for its purpose the mutual advantage of the buyer and seller, and hence one of them should not be overburdened for the advantage of the other, but the burdens and benefits should be equally distributed. Hence, it is unjust to sell an object for more than it is worth, or to buy it for less than it is worth.
2125. The Criteria of a Just Price.—(a) The constitutive norm of a just price is not merely subjective, that is, the fairness does not depend on the arbitrary wishes or on the special needs of the contractants, or on some monopoly which controls the prices; it is objective, that is, founded on the value of the thing sold, its capacity to be of benefit and satisfaction to its possessor, its rarity, the amount of labor put into its production and care, etc.
(b) The manifestative norm for commodities that are in common use (such as the necessities of life and the more usual luxuries) is the common judgment expressed either in law (legal price) or in the free custom of buyers and sellers at a particular place and time (market price); for objects that are not in common use and that have no settled price (e.g., rare archeological finds, ancient documents or paintings) the norm is the prudent and free judgment of the parties, or the decision of an expert chosen by them.
2126. The Obligation of Observing Prices Settled by Law Or Custom.—(a) The legal price (e.g., in some countries the prices on government monopolies, such as tobacco and salt), which in modern times is rare, is ordinarily obligatory in virtue of commutative justice, since its disregard harms one of the parties to the sale. But in exceptional cases the price may for reasons of equity be no longer obligatory (e.g., when the lawgiver does not insist on its observance).
(b) The market price is ordinarily of like obligation, and for the same reason. But it should be noted that the current price allows of some latitude, since the common estimate does not agree on exactly the same figure, and hence there is a highest, a lowest, and an average price. Injustice is done when one sells above the highest market price, that is, when one charges a sum notably in excess of that charged by others at the same place and time; or when one buys below the lowest market price, that is, when one pays a sum notably less than that paid by other buyers. St. Alphonsus gives as a rule that when a commodity is valued at 5, it may be sold for 6 or bought for 4; when valued at 10, it may be transferred or acquired for 12 or 8; when valued at 100, it may be exchanged for 105 or 95.
2127. When the Market Price May Be Disregarded Without Injustice.—In some exceptional cases one may disregard the market price without injustice, if there are reasons that justify this.
(a) Reasons that rest on the matter of the contract are that the thing on sale has increased or decreased in value (e.g., the merchandise is of extraordinary excellence or rarity), or that the contractant would lose or risk loss from the sale itself by keeping to the market price (e.g., the buyer would by his purchase deprive himself of money that could be used more profitably in another transaction; the article if sold would have to be replaced by the seller at a higher price; the vendor by waiting can make a better sale later; the object which a person wishes to purchase is especially prized by the owner and cannot be duplicated). In these cases, however, the vendor should give notice to the buyer that for special reasons a higher price is being asked, so that the latter may have the choice of going elsewhere, if he prefers.
(b) Reasons that rest on the manner of the contract are that certain exceptional forms of sales are justified by law or custom and do not violate basic justice. Auction sales are of this kind, and, if the conditions of aleatory contracts are observed so that the risk will be equal on both sides, it is not unfair to take a price above the highest current price or to bid and buy below the minimum price.
2128. If the reason for the increase is the accommodation of the sale itself to the purchaser, because he specially prizes the article, does it justify an increase above the market price?
(a) If the article has become of greater value to many because of its own worth, the market value has also risen, and one may raise one’s price; but if its greater value to many is due only to public distress, as in time of war, it would be a cruel form of injustice known as profiteering to raise the price exorbitantly.
(b) If the article has become of greater value to one person only, the seller may not raise his price for that reason, since the special worth the article has is not inherent in it, and hence it may not be sold by the owner as if it were his own possession. If, however, the purchaser wished to add something as a free gift, there would be no objection to his doing so. The same principles apply to the purchase of an article at less than its value, for the sole reason that ready money has special value for the seller.
2129. Unjust Sales Based on Ignorance of Real Value.—There are also cases in which an object is purchased at an unjust price because its true value was unknown to the contractants or was hidden.
(a) If the value was unknown on account of substantial error (e.g., a woman buys paste ornaments, thinking they are genuine diamonds), the contract is invalid; if it was unknown on account of the individual error of a contractant (e.g., a woman buys a diamond of great value for a few dollars, because the seller did not know the value of the jewel), the contract is unjust; if it was unknown on account of public error reflected in the current price (e.g., an art dealer buys at a low price a masterly painting, because his superior judgment enables him to recognize in it qualities which others did not perceive), the contract is both valid and just. It is also lawful to buy at the present prices when one knows from sources that one can honorably use that the objects purchased will soon rise greatly in value, for one is not bound to share with others one’s personal knowledge.
(b) If the hidden value is no man’s property or is abandoned (e.g., a man buys a field in which he, but not the owner, knows that a treasure is concealed, or he buys a goose and finds gold pieces in its stomach and cannot discover how they got there), the buyer is entitled to acquisition; but if it has an owner who can be discovered (e.g., a man buys a coat in a second-hand store and discovers a large quantity of money in bills sewed inside the lining, and is able to trace back the coat to its former wearer, if he tries), the buyer is bound to restitution.
2130. Obligation of Restitution on Account of Unjust Prices.—(a) Unjust Possession.—If there was bad faith without fraud, the seller should restore the difference between what he received and the highest current price, the buyer the difference between what he paid and the lowest current price. Overcharges or underpayments in conventional prices should be compensated for according to a reasonable standard, such as the decision of the experts.
(b) Unjust Damage.—If there was bad faith and fraud with resultant damages to one of the parties, the losses should be made good, even though the just price itself was not violated by excess or defect (see 1762).
(c) Nullity.—If there was good faith on both sides, there is no obligation of restoration, unless we suppose substantial error, lack of proper consent, conditional agreement, etc., which make the sale null or rescindable (see 1725).
2131. Injustice Regarding the Thing Sold.—Having spoken of the injustices committed in reference to the price, we shall now treat of the injustices committed in reference to the thing sold. The contract supposes that the thing sold be of a certain character, and hence injustice is done if one of the parties wilfully misleads the other about that character.
(a) Thus, the species of the thing sold enters into the contract, and so it is unjust to deceive another person about the nature of the thing that is being sold (e.g., if the seller gives inferior substitutes or adulterated goods to those who desire the genuine and pure article, or if the buyer deceives an inexperienced merchant into thinking that the high-grade clothing material he has for sale is low grade).
(b) The quantity of the thing sold is also a part of the contract, and it is unjust to take advantage by giving less or taking more than is agreed on: “Thou shalt not have divers weights in thy bag, a greater and a less, neither shall there be in thy house a greater bushel and a less” (Deut., xxv. 13, 14).
(c) The quality of the thing sold belongs to the contract, and hence there is fraud if one of the parties deceives the other about it (e.g., if the horse sold is sickly or slow, when he is supposed to be healthy and speedy).
2132. Defects in the Thing Sold.—If there are defects in an article sold, but a fair reduction in the price is made on account of the imperfection of the article, there is no injustice in the price. But the seller is unjust, nevertheless, if he conceals the defects in spite of a contrary condition in the contract, for he injures the buyer by leading him into an agreement against his will.
(a) There is an indicated condition when the buyer inquires whether there are defects in the article, having the intention to take nothing that has any considerable defect. In such a case if the seller conceals even an accidental defect (i.e., one that makes the article less suitable for the buyer), the contract is null on account of lack of consent, or at least, as others think, it is rescindable on account of the fraud practised. But if a defect is inconsiderable, the contract, unless it is expressly stipulated to the contrary, is good and lawful, for there is hardly anything that has not some small defects.
(b) There is an implied condition when the buyer makes no inquiry, but there is a substantial defect (i.e., one that makes the article dangerous or unsuitable for the purchaser), and this defect is hidden, either because it is of a kind that would escape most persons, or because the purchaser is inexperienced or unable to perceive it for himself. Since every person who buys intends to get something useful, there is no consent and the contract is invalid, if one is given something harmful (e.g., corrupted or poisonous food instead of good food), or something entirely useless to him either for service or for sale (e.g., a lame horse instead of a sound horse for one who deals in race-horses).
2133. Circumstances in Which Defects Need Not Be Revealed.—Fairness of price being supposed, the seller is not unjust in not calling attention to defects in the thing he sells, if the buyer does not ask about defects and there is no implied condition that the seller should volunteer the information. This happens as follows:
(a) if the defect is hidden, but only accidental, there is no condition that the seller shall point out the defect, for the understanding is only that the buyer shall receive something serviceable at a fair return for his money, Nevertheless, most merchants wish to please the public and will take back or exchange an article that is not satisfactory;
(b) if the defect is open, but accidental, there is no condition that the seller shall instruct the buyer about things that the latter can and should observe for himself; for it is supposed that the buyer will exercise ordinary care and prudence in making purchases, nor is the seller paid for supplying this, nor for assisting the buyer to make good bargains. Thus, if a man were to buy a one-eyed horse, because he had not examined the horse, he should blame his own negligence, not the silence of the seller, for his bad bargain.
2134. Definition of Trading.—Trading (_negotiatio_) in the strict sense is the purchase of an object with the intention of selling it unchanged at a profit. If any one of the conditions mentioned in this definition are lacking, there is trading in a wide sense. (a) Thus, trading includes purchase, and hence he who sells the produce of his own farm or vineyard is not strictly a trader; (b) there must be an intention of reselling the thing bought, and hence there is trading only in a wide sense if one buys an article for one’s own use but, finding it unsuitable to that use, sells it to another person; (c) the object must be sold unchanged, that is, in the same form in which it was received, otherwise there is not strict negotiation, as when one buys colors and canvas and makes them into a picture; (d) the object must be sold at a higher price than was paid for it, and hence it is not trading in the strict sense to let a customer have an article for just what it has cost oneself.
2135. The Morality of Trading in the Strict Sense.—(a) In itself, trading has the appearance of evil, inasmuch as money-making may be an encouragement to avarice. But in reality profit as an end is morally indifferent, neither good nor bad, and all will depend on the ultimate reason for which one engages in business. He who makes the whole purpose of his existence the acquisition of gain is a materialist, but he who has some higher end, such as public benefit or private maintenance, is virtuous in his aims. (b) For clerics, trading is forbidden by Canon Law (Canon 142), and the reason is that clerics should be free from the distractions and dangers of commerce, so as to devote themselves entirely to their own spiritual duties (II Tim., ii. 4).
2136. Usury.—The sin of usury is committed in two ways.
(a) Usury in the strict sense is the taking of interest by reason of intrinsic title (i.e., on account of the use) for money or other fungible loaned on condition that it be restored in kind (_mutuum_). This is unjust since it exacts payment for that which is nonexistent, that is, for use, as a distinct value, of a fungible whose only value is in its use (see Aristotle, _Politics_, Bk. I, Ch. 10, 1258b 2-8; St. Thomas, Summa Theologica II-II, q. 78, a. 1). This was the opinion of most medieval theologians based on the fact that money was solely a medium of exchange. Interest was permitted, however, on the grounds of extrinsic titles, e.g., compensation for the expense of a transaction (_damnum emergens_), the loss of opportunity to make good bargains (_lucrum cessans_).
(b) Usury in the wide sense, which is all too common, is the taking of interest for a fungible loaned at _mutuum_, where there is an extrinsic title (e.g., the loss or inconvenience suffered by the lender) for the interest, but the rate charged is unjust, exceeding that fixed by law or that which is fair and reasonable (see Canon 1543). This is unjust when the lender takes more than his loan is worth; it is uncharitable when the lender does not demand more than the worth of his loan, but does exact what is due in a heartless manner. Examples of usury in the wide sense are the acts of loan sharks who take advantage of the distress of the poor to make them pay enormous interest for small loans, or who hold the debtor to the strict letter of the agreement at a great loss to him.
In recent years a new concept of usury in the wide sense has emerged. It is based upon the fact that in modern times the function of money has changed. In ancient times it was solely a medium or measure of exchange that could not be turned easily into capital. With the emergence of the capitalistic system, opportunities for investment increased, and money assumed the role of a factor of production. Money assumed a new value and function: it became virtually productive, and so today money does fructify. To place money, then, at the disposal of another to be employed in profitable ventures constitutes an economic service and, as such, is worth its price as any other service. This price of money constitutes modern interest, which seems to differ radically from the old contract of interest and to be more one of hire or lease. So viewed, interest, or the price of money, is determined in the same way as the price of any other service; the unjust price, or usury, is an excessive price. This is the modern concept of usury.
2137. Principles Obligatory in All Forms of Contract.—The principles of equality and honesty that are morally obligatory in sales and loans at interest are also obligatory in other forms of contract. The following are examples of equality.
(a) Gratuitous Contracts.—Obviously these contracts do not require equality in respect to recompense, since their nature is that no recompense is given for what is received. But in other ways equality must be observed. Thus, there must be mutual consent, offer on one side and acceptance on the other; there must be mutual respect, for each must honor the gratuitous promises made to the other; there must be a return of the same thing in quality and quantity as was borrowed, unless this would mean (as in _mutuum_) a loss to the borrower, etc. Moreover, the fact that all the advantage is received by one party is balanced by the fact that this party must bear the ordinary expenses and is held to special care himself, but cannot exact special care in the other party. Thus, a borrower has all the advantage from a loan, and he is obliged to use extreme care in using the lender’s property, while a depositor has all the advantage from the contract of deposit and cannot demand more than ordinary diligence of the depositary in guarding the goods left with him.
(b) Aleatory Contracts.—Aleatory contracts, or contracts of chance, are concerned with some uncertain event whose outcome depends upon luck or skill or a combination of both. The chief forms are betting, lottery and gaming (all are considered as gambling), to which must be added insurance and market speculations. All of these are indifferent in themselves and obtain their morality from circumstances. However, gambling, besides conforming to the requirements of contracts in general, must observe some special conditions to guarantee its lawfulness:
1) The outcome should be objectively uncertain and not a “sure thing” to be truly a contract of chance. While the contractants may be subjectively certain of winning, neither may so manipulate the matter as to exclude the other’s chance of winning. Should one insist upon betting against another’s assurance of a certain outcome, he is making a gift, hardly a bet.
2) Each must stake what belongs to himself and is not needed for satisfying other obligations, e.g., supporting one’s family, paying creditors, etc. Failure to observe this condition leads to many sins of theft or negligence. Should a person gamble with money belonging to another, _per se_ he has a right to the winnings under the title of industrial fruits. However, if it would be impossible for him to restore in the event of a loss, the wager is void and the winnings must be restored to the other player, since the amount bet could not be lawfully won by the other contestant.
3) A reasonable proportion should be observed between what is bet and the probable winnings, and all betting should offer a fair chance of winning. Equality is not necessary, but odds and handicaps should be offered by the favored side. However, the odds may be waived by other bettors.
4) Honesty must prevail to exclude fixing the outcome or an unlawful style of play. The conventions of each bet or game establish the norms of cheating. Thus, hidden cards, marked cards, false dice void a bet. But running a horse solely to “tighten him” or “round him into shape” without full effort to win is expected in horse racing. Winnings through cheating must be refunded.
5) The loser must pay. Since civil law forbids many forms of organized gambling, the question arises whether a wager that has been outlawed constitutes matter for a valid contract that must be fulfilled. If the law is purely penal, the contract is valid and the obligations ensue; if it is a law that binds morally, then the contract is invalid, and the loser probably need not pay, but has acted sinfully in gambling.
Although not sinful in itself, gambling is so open to serious abuse that it has been strictly regulated by civil laws which bind in conscience.
Insurance is reduced to the category of contracts of chance, although its purpose is different from gambling, for it is concerned not with an uncertain good, i.e., to make money quickly, but with an uncertain evil, i.e., to avoid loss. In many instances an individual who does not take out insurance gambles more than one who does.
Conditions Requisite for Validity. The special conditions requisite for the validity of an insurance contract are founded upon its aleatory nature. This involves especially that the matter of the contract is in some way outside the control of both insured and insurer and beyond their power, both legal and moral, to govern beforehand. From this follows the second essential condition, that there be some risk for both parties. Some moralists today maintain that many insurance contracts are unjust to the insured by reason of defect of proportionate risk on the part of the insurer. They argue that the insurer avoids all risks and makes increasing profits annually whenever insurance is on such a large scale that the use of statistical tables favors the insurer. The fact that insurance companies are listed among the most wealthy corporations lends credence to the argument and explains why some moralists favor the insured in cases of restitution not involving fraud on the part of the beneficiary. Other moralists insist that such injustice can not be proved, that high profits are owing to increased efficiency and better service, that premiums are adjusted when it becomes apparent that they are out of proportion to the risks involved by the insurers.
On the part of the insurer is required the ability to pay indemnities occurring at the normal rate, but not to cover all at once. His right to the premiums is correlative to the obligation to pay the stipulated indemnities, while his liabilities are based upon probable losses occurring successively. In regard to the insured, his basic obligation is to make an honest and complete disclosure of the risk involved. Moral cases, for the most part, are concerned with error, innocent misrepresentation, and fraud on the part of the insured. Both the natural and civil law indicate the effect of these elements on an insurance contract.
The natural law invalidates a contract in which consent of one or both parties arises from substantial error concerning the nature or the matter of the contract—in insurance, the risk involved. In general, then, whenever the error of the insured is such that he would not have contracted had he known the facts, the contract is invalid, even if the error was due to innocent non-disclosure or misrepresentation on the part of the insured. In such cases, the innocent insured has no right to the indemnity owing to the invalidity of the contract; he has, however, a natural right to all premiums paid out, since no contract is involved and the insurer has no claim to them. In case of fraud, at least after judicial decision, the insured would have no right to the premiums and must also recompense the insurer for expenses sustained.
Error is considered accidental and as not invalidating in natural law when the insurer, knowing the facts, would have issued a policy, but at a higher premium. In this case the beneficiary may accept the indemnity, but must return the difference in the amount owed in premiums.
A special case of substantial error involving a disease unknown to the insured and undiscovered or undiscoverable by the insurance company doctors is considered by moralists as not invalidating a contract in natural law. It is argued that the insurer must assume such risks and that the insured intends to cover such unknown conditions. Moreover, an invalidating clause concerning such a contingency may be considered penal in nature and obligatory only after the sentence of a judge.
Insurance contracts and the civil laws governing them are so complicated that expert legal knowledge is required to understand the legal status of many insurance cases. However, a few dispositions of the civil law which differ from the tenets of the natural law should be kept in mind by the priest or confessor in dealing with the matters. Two favor the insurance companies over the insured:
1) when fraud or misrepresentation lead to accidental error, the contract is declared void or voidable;
2) innocent non-disclosure or misrepresentation in good faith leading to accidental error also render the insurance contract voidable or perhaps even void. It is probable that the beneficiary in such cases might be permitted to claim the benefits due him according to the naturally valid contract, since these civil law dispositions are contrary to the conclusions of the natural law. He would be obliged, however, to restitution for damages caused by his fraud or misrepresentation committed with grave theological fault.
One prescription recognized by civil law and in some places made mandatory favors the insured, the convalidating or incontestability clause. The insurance company recognizes the validity of the policy after a specified period of time has elapsed, even in cases involving fraud on the part of the insured. If the contract prior to the time was voidable, the company loses its right to contest its validity; if the contract was void, it becomes convalidated. By terms of this clause, the natural-law obligation to restore by reason of fraud ceases and the beneficiary may lawfully keep the insurance money.
Obligations Arising after the Policy Is Issued. 1) The insured must pay the premiums at the times and according to the terms stated in the policy.
2) The insured must not increase the risk assumed by the company. Concretely, in cases of property insured, the insured is bound in commutative justice not to deliberately destroy or damage the property covered by the policy under penalty of losing all rights to compensation. Compensation could be claimed, however, if the damaging or destructive action was only theologically right.
3) He must not claim or accept indemnity for articles not damaged; he must not submit a claim beyond a just estimate of the real damage. Some moralists maintain that a claim may be made for a higher amount with the intention of getting a just value after the insurance adjustor has made his investigation and lowered the estimated value. The adjustor’s estimate, even if higher than the insured estimate, may be accepted provided no means have been taken to prevent a full and free examination of damage.
Operations on the stock market and similar markets are primarily contracts of buying and selling; they become contracts of chance when they assume the quality of speculation, i.e., gambling on future changes of prices. It is generally conceded that such contracts are not morally wrong in themselves and follow the laws of betting. Additional justification is added on the ground that such transactions in many instances supply the capital required for large-scale operations, future deliveries, etc. Occasional dissenting voices insist that certain aspects of such transactions, e.g., dealing in future values of wheat, rye, and other commodities, are immoral since they tend to determine prices independent of the real value of the products, the laws of supply and demand, etc. However, the arguments seem to involve more abuses controllable, if not actually controlled, by marketing laws and civil laws rather than any immorality in the operations themselves.
(c) Onerous Contracts.—These contracts require that there be equality between the recompense and the thing received. Thus, in a lease the lessor must not charge excessive rent, and the lessee must pay the rent faithfully; in a contract of labor, the employer must pay a fair wage (that is, one that at the minimum will meet the primary needs of the worker and his family to live in frugal comfort, and which will moreover equal the special value of the service given; for a complete treatment of the theology of the just wage, see Fr. Jeremiah Newman, “The Just Wage,” _Theology Digest_, Vol. 2, Spring 1957, pp. 120-126, and “A Note on the Living Wage,” by Edward Dui, S.J., in the same issue), and the laborer on his part must give a fair day’s work as to quantity and quality; in partnership, the members must divide the profits and loss according to a reasonable distribution; in guaranty, pledge, and mortgage, justice requires that the burden assumed be not out of proportion to the benefit that is received.
2138. Fraudulent Contracts.—Examples of fraud in contracts are the following:
(a) in gratuitous contracts, a donee who by false representations obtains a gift, a lender who fails to make known to the borrower defects or dangers in the thing loaned;
(b) in onerous contracts, a landlord who conceals defects from one who is renting a house, members of a business concern who keep back information from partners or who give out false statements in order to entice investors, creditors who conceal their knowledge about the unreliability of a man for whom surety is given them;
(c) in aleatory contracts, in a pure wager, a person who bets on a thing supposed to be uncertain but about which he has certain information, or who knows that he will be unable to pay should he lose, or who will allow no odds though he knows that the probabilities are in his favor; in gaming, a player who pretends to be ignorant in order to inveigle another person into a game of skill, or who does not observe the rules of the game, or who fixes the cards or dice for himself in a game of chance; in lottery, a drawer who manipulates the lots so as to favor some of the players, etc.