If I order a pipe of port from a wine-merchant abroad; at what period the property passes from the merchant to me; whether upon delivery of the wine at the merchant's warehouse; upon its being put on ship-board at Oporto; upon the arrival of the ship in England; at its destined port; or not till the wine be committed to my servants, or deposited in my 'cellar; are all questions which admit of no decision, but what custom points out: Whence in justice, as well as law, what is called the custom of merchants, regulates the construction of mercantile concerns.

CHAPTER VIII.

CONTRACTS OF HAZARD.

Br contracts of hazard, I mean gaming and insurance. What some say of this kind of contracts, "that one side ought "not to have any advantage over the other," is neither practicable nor true. It is not practicable: for that perfect equality of skill and judgment which this rule requires, is seldom to be met with. I might not have it in my power to play with fairness a game at cards, billiards, or tennis, lay a wager at a horse-race, or underwrite a policy of insurance, once in a twelve-month, if I must wait till I meet with a person, whose art, skill, and judgement in these matters, is neither greater nor less than my own. Nor is this equality requisite to the justice of the contract. One party may give to the other the whole of the stake, if he please, and the other party may justly accept it, if it be given him; much more therefore may one give to the other a part of the stake, or, what is exactly the same thing, an advantage in the chance of winning the whole.

The proper restriction is, that neither side have an advantage by means of which the other is not aware; for this is an advantage taken without being given. Although the event be still an uncertainty, your advantage in the chance has a certain value; and so much of the stake as that value amounts to, is taken from your adversary without his knowledge, and therefore without his consent. If I sit down to a game at whist, and have an advantage over the adversary, by means of a better memory, closer attention, or a superior knowledge of the rules and chances of the game, the advan

parties ought to do by virtue of their contract, depends upon their consciousness at the time of making it; whereas a third person finds it necessary to found his judgement upon presumptions, which presumptions may be false, although the most probable that he could procced by.

CONTRACTS OF LENDING OF INCONSUMABLE PROPERTY. tage is fair, because it is obtained by means of which the adversary is aware; for he is aware, when he sits down with me, that I shall exert the skill that I possess to the utmost. But if I gain an advantage, by packing the cards, glancing my eye into the adversaries' hands, or by concerted signals with my partner, it is a dishonest advantage, because it depends upon means which the adversary never suspects that I make use of.

The same distinction holds of all contracts into which chance enters. If I lay a wager at a horse-race founded upon the conjecture I form from the appearance, and character, and breed of the horse, I am justly entitled to any advantage which my judgment gives me; but, if I carry on a clandestine correspondence with the jockies, and find out from them that a trial has been actually made, or that it is settled beforehand which horse shall win the race, all such information is so much fraud, because derived from sources which the other did not suspect when he proposed or accepted the

wager.

In speculations in trade, or in the stocks, if I exercise my judgment upon the general aspect and posture of public affairs, and deal with a person who conducts himself by the same sort of judgment, the contract has all the equality in it which is necessary; but, if I have access to secrets of state at home, or private advice of some decisive measure or event abroad, I cannot avail myself of these advantages with justice, because they are excluded by the contract, which proceeded upon the supposition that I had no such advantage.

In insurances, where the underwriter computes his risk entirely from the account given by the person insured, it is absolutely necessary to the justice and validity of the contract, that this account be exact and complete.

CHAPTER IX.

CONTRACTS OF LENDING OF INCONSUMABLE PROPERTY. WHEN the identical loan is to be returned, as a book, a horse, a harpsichord, it is called inconsumable, in opposition to corn, wine. money, and those things which perish, or are parted with in the use, and can therefore only be returned in kind.

The questions under this head are few and simple. The first is, if the thing lent be lost or damaged, who ought to bear the loss or damage? If it be damaged by the use, or by accident in the use, for which it was lent, the lender must bear it ; as, if I hire a job-coach,

38 -CONTRACTS OF LENDING OF INCONSUMABLE PROPERTY?

the wear, tear, and soiling of the coach must belong to the lender; or a horse, to go a particular journey, and, in going the proposed journey, the horse die, or be lamed, the loss must be the lender's: on the contrary, if the damage be occasioned by the fault of the borrower, or by accident in some use for which it was not lent, then the borrower must make it good; as, if the coach be overturned or broken to pieces by the carelessness of your coachman, or the horse be hired to take a morning's ride upon, and you go a-hunting with him, or leap him over hedges, or put him into your cart or carriage, and he be strained, or staked, or galled, or accidentally hurt, or drop down dead, whilst you are thus using him, you must make satisfaction to the owner.

Two cases are distinguished by this circumstance, that in one case the owner foresees the damage or risk, and therefore consents to undertake it; in the other case he does not.

It is possible that an estate or a house may, during the term of a lease, be so increased or diminished in its value, as to become worth much more, or much less, than the rent agreed to be paid for it. In some of which cases it may be doubted to whom, of natural right, the advantage or disadvantage belongs. The rule of justice seems to be this: if the alteration might be expected by the parties, the hirer must take the consequence; if it could not, the owner. An orchard, or a vineyard, or mine, or a fishery, or a decoy, may this year yield nothing, or next to nothing, yet the tenant shall pay his rent; and if the next year produce tenfold the usual profit, no more shall be demanded; because the produce is in its nature precarious, and this variation might be expected. If an estate in the fens of Lincolnshire or the isle of Ely, be overflowed with water so as to be incapable of occupation, the tenant, notwithstanding, is bound by the lease; because he entered into it with a knowledge and foresight of this danger. On the other hand, if, by the irruption of the sea into a country where it was never known to have come before, by the change of the course of a river, the fall of a rock, the breaking out of a volcano, the bursting of a moss, the incursions of an enemy, or by a mortal contagion amongst the cattle; if, by means like these, the estate change, or lose its value, the loss shall fall upon the owner; that is, the tenant shall be either discharged from his agreement, or be entitled to an abatement of rent. A house in London, by the building of a bridge, the opening of a new road or street, may become of ten times its former value; and, by contrary causes, may be as much reduced in value; here, also, as before, the owner, not the hirer, shall be affected by the alteration. The reason upon which our determina→

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tion proceeds is this, that changes such as these, being neither foreseen nor provided for by the contracting parties, form no part or condition of the contract; and therefore ought to have the same effect as if no contract at all had been made (for none was made with respect to them) that is, ought to fall upon the owner.

CHAPTER X.

CONTRACTS CONCERNING THE LENDING OF MONEY.

THERE exists no reason in the law of nature, why a man should not be paid for the lending of his money, as well as of any other property into which the money might be converted.

The scruples that have been entertained upon this head, and up. on the foundation of which the receiving of interest or usury (for they formerly meant the same thing) was once prohibited in almost all Christian countries,* arose from a passage in the law of Moses, Deuteronomy xxiii. 19, 20; "Thou shalt not lend upon usury "to thy brother; usury of money, usury of victuals, usury of any "thing that is lent upon usury: unto a stranger thou mayest lend 46 upon usury: but unto thy brother thou shalt not lend upon usury."

This prohibition is now generally understood to have been intended for the Jews alone, as part of the civil or political law of their nation, and calculated to preserve that distribution of property to which many of their institutions were subservient; as the marriage of an heiress within her own tribe; of a widow who was left childless, to her husband's brother; the year of jubilee, when alienated estates reverted to the family of the original proprietor;—regulations which were never thought to be binding upon any but the commonwealth of Israel.

This interpretation is confirmed, I think, beyond all controversy by the distinction made in the law between a Jew and a foreigner:-"unto a stranger thou mayest lend upon usury, but unto thy "brother thou mayest not lend upon usury;" a distinction which could hardly have been admitted into a law, which the Divine Author intended to be of moral and of universal obligation.

The rate of interst has in most countries been regulated by law.

* By a statute of James the First, interest above eight pounds per cent. was prohibited (and, consequently, under that rate allowed) with this sage provision, “That this statute shall not be construed or expounded to allow the practice of "usury in point of Religion or conscience."

The Roman Law allowed of twelve pounds per cent. which Justinian reduced at one stroke to four pounds. A statute of the thir teenth year of Queen Elizabeth, which was the first that tolerated the receiving of interest in England at all, restrained it to ten pounds per cent.; a statute of James the First, to eight pounds; of Charles the Second, to six pounds; of Queen Anne, to five pounds, on pain of forfeiture of treble the value of the money lent: at which rate and penalty the matter now stands. The policy of these regulations is to check the power of accumulating wealth without industry; to give encouragement to trade, by enabling adventurers in it to borrow money at a moderate price; and of late years, to enable the state to borrow the subject's money itself.

Compound interest, though forbidden by the law of England, is agreeable enough to natural equity; for interest detained after it is due, becomes, to all intents and purposes part of the sum lent. It is a question which sometimes occurs, how money borrowed in one country, ought to be paid in another, where the relative value of the precious metals is not the same. For example, suppose I borrow a hundred guineas in London, where each guinea is worth one and twenty shillings, and meet my creditor in the East Indies, where a guinea is worth no more perhaps than nineteen, is it a satisfaction of the debt to return a hundred guineas? or must I make up so many times one and twenty shillings? I should think the latter; for it must be presumed, that my creditor, had he not lent me his guineas, would have disposed of them in such a manner as to have now had in the place of them so many one and twenty shillings; and the question supposes that he neither intended, nor ought to be a sufferer, by parting with his money to me.

When the relative value of coin is altered by an act of the state, if the alteration would have extended to the identical pieces which were lent, it is enough to return an equal number of the same denomination, or their present value in any other. As, if guineas were reduced by act of parliament to twenty shillings, so many twenty shillings, as I borrowed guineas, would be a just re-payment. It would be otherwise, if the reduction was owing to a debasement of the coin; for then respect ought to be had to the comparative value of the old guinea and the new.

Whoever borrows money, is bound in conscience to repay it. This, every man can see; but every man cannot see, or does not, however, reflect, that he is, in consequence, also bound to use the means necessary to enable himself to repay it. "If he pay the money when he has it, or has it to spare, he does all that an honest man can do," and all, he imagines, that is required of him; whilst the