NARRATOR: Thanks for joining this episode of the No. 86 lecture series, in which Professor Richard Epstein discusses the Roman Law of Contracts. Episode 1 explores: Why we need contracts How contracts worked in the Roman system Types of contracts and why these categories are important This lecture is part of a series with Professor Epstein on how this ancient legal system can provide crucial insights about modern problems. Professor Epstein is one of the most prominent legal scholars of our day. He is the inaugural Laurence A. Tisch Professor of Law at NYU School of Law, a Senior Fellow at the Hoover Institution, and Professor of Law Emeritus and a senior lecturer at the University of Chicago. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. PUBLIUS: Why do we need contracts? RICHARD EPSTEIN: When you acquire property, and you start talking about either it's outright transfer or the creation of divided interest, there is only one mechanism of which we are aware to do this, and that's by a voluntary agreement between two parties. So essentially what happens is the basic theory of contract which applies everywhere, is that you have two major kinds of assets. You have labor on the one hand, and you have external property on the other. And what you realize, is that there can be advantages to trade in labor and in property. Now, the law of contract talks about all these things. What it then has to do, is figure out exactly what the mechanisms are going to be, and what the rules are going to be to make sure that these voluntary exchanges take place. The stress on the word voluntary is extremely important, because the theory of a voluntary transaction is, I surrender something to you, that is worth less to me than it is to you. And you surrender something to me which is of greater value to me, that's called an exchange. But there are also other transactions in which it turns out, that for good and sufficient reasons, I'm prepared to give you something and not to ask for something in exchange. Sometimes I do this because you're the object of my natural love and affection, and I get satisfaction, some kind of utility out of the fact that you're made happier about what's going on. But in other cases, these things are essentially inducements for further transactions. So, to give you a very homely example, you go into the bakery, you're trying to figure out whether to buy a dozen cookies, and sure enough there'll be a tray out there and you could take a sample of a half-a-cookie, to see whether or not you like it. You're not gonna be charged for this thing if you eat it, and the reason you do it, is you think there's a 70% chance that they'll buy the package, and I'm better off giving them these things. There are other kinds of options that you give to people, I mean to keep this contract open for an hour or two so you could decide whether or not you want to buy, and you make required payment for it, you may not. But generally speaking, what happens is that people have all sorts of business and personal motives for doing these things. So the question about the law of contract is, if you start to see a series of voluntary promises, whether reciprocal or not, between two particular persons, you assume that there's gonna be these gains from trade, and that's why all forms of contract are going to be linked together. PUBLIUS: What sort of transactions might be involuntary? RICHARD EPSTEIN: Then the question is, what are the enemies of voluntary contracts? And at this particular point one goes back a long way to Aristotle, and you start to figure out what the things are that undermine contractual security. The powerful of these things turns out to be duress, which is the threat or use of force by one person against another. And what we mean by that is, somebody says, I would like to buy your house and to pay you 100 dollars for a 500 dollar house, and by the way, if you don't agree to the deal, I'll blow your brains out. Under those circumstances, you're supposed to agree to the deal, but on the other hand, when the gun is removed and you have the time, what you can say is, look, the duress essentially meant that there's no reason whatsoever to believe that this gain transaction was for mutual benefit. So, we're going to have to set it aside, and then what you do is you figure out exactly how and when you do it, and one technique would be to say, when the time comes for me to convey the house, and he sues to get it, I will say, I don't have to do it because I've been in duress. On the other hand if the transfer is already complete and then it maybe a slightly higher burden of proof, but now in effect you can soon order to recover the property on the grounds that it's unjust enrichment for somebody to have obtained something via property if the use of force has been involved. Whatever you say about force can be said about fraud. If you're lying in order to get a deal, what you're basically doing is telling somebody that the thing has to buyout to him greater than he suspects, or a cost lower, and if he knew the truth, he would not do this thing because now, what was a positive transaction for him becomes a negative transaction. Once you start doing this with fraud, you're gonna have to worry about non disclosure, you're gonna have to worry about concealment, then you're going to have to worry about misrepresentations that are not fraudulent, some of which may be negligence, some of which may be innocent, and in all of these cases you have to figure out whether or not, these particular impediments the contract are going to allow you to upset the arrangement. And finally, there's a general problem of mistake, which we've already encountered in connection with those various issues on exesion, or where I happen to make my particular statute out of your piece of bronze, or your piece of stone, and so it is, it may be well that it's an innocent mistake, and I believe that certain facts are true, and it turns out they're not true, and if I know the truth, I would never make the deal. The question is, can I set aside a transaction on where there's a mistake, does it matter whether it's a mistake made by one party only, or whether it's a mutual mistake. And so, these kinds of vitiating conditions are something that run through the entire body of contract law, and are not necessarily tied up to this, that or the other form of contract. So that's the kind of general part, the logical gains from trade, and the examination of those kinds of conditions, which essentially in the formation of a contract, make it unlikely that the transaction that emerges is one that would have met the consent, and the willingness of the party who is actually now trying to undo this thing in one way or another. So these contracts of course are very much different from the situation of coercion, because in a coercion it's pretty easy to say, if I wanna beat you over the head and do so, it's generally going to be a case that is for the loss. If I wanna take your property, it's gonna be that way as well, and so whenever there's the use of force, you then have a heavy duty to sort of justify, the force in question by self defense in necessity if I consent to something of the sort, and the key problem, which we'll talk about at the end, is to the extent that force is used as part of a consensual arrangement, whether it be by way of theft or whether it be by way of home, you're not quite sure whether you're on the contract side of the line dealing with mutual gains and positive transactions, or in the negative side, where you're dealing with transactions, which if allowed to replicate would essentially create social chaos. The sort of issue that we talked about when we discussed natural law. PUBLIUS: Is a contract always a complex arrangement? RICHARD EPSTEIN: Now, the next question that you have to face in the law of contract is the question of classification. It turns out that what happens is, as a matter of course, is that people when they enter into contract usually think about some fraction of the relevant issues, but they don't necessarily think about all the particular details in question. And a lot of what the court law of contract does is to try to set up a series of terms, which you may be free to vary, but typically won't even think about when you're worried about a particular transaction. So let me just give an extremely simple example. What happens is that I go into the store, I say I'd like to get a pound of potatoes. Now the question that is, what's the sequence of performance in this particular contract. We haven't said a word about that, and so, can the following thing take place in which the proprietor of the business doesn't give you the potatoes, where he says you promised to pay me two dollars, so I'm gonna sue you now for the two dollars, and you can turn around and sue me for the potatoes later. And everybody kinda looks at this and says well that clearly has to be very wacky to do this thing, and so, if you were to tell people this is simply a case where you have to tender an order, so they say I don't know what the word tender means, because we're not talking here about tenderness and love in a personal relationship. What we mean by tender is whether or not you've done everything necessary in order to complete the transfer of the goods, except handing the thing over, or the same thing with respect to money. And so what we do is, we imply a series of concurrent conditions in these transactions and what the conditions say is, I do not have to pay you for the potatoes until you tender them to me, and you don't have to tender the potatoes until the cash is ready on the table. The theory is, each party can treat its promise as security for the others so that they go forward simultaneously or not at all. And this then becomes part of the implied law of conditions, and there's a kind of deep rational as applicable in Roman times as today, as to how these conditions are inferred. What you're trying to do is when an agreement is as skimpy as the one that I've just mentioned, is to impose terms on the conditions for payment and delivery, that minimize the credit risk for both sides. And that sure, you're gonna be much more efficiently done if neither party has to provide performance until the other side has tendered, and once you do that, that arrangement has been formalized in Anglo-American law, and it was also part of Roman law. PUBLIUS: Can you elaborate on how contracts worked under Roman law? RICHARD EPSTEIN: At this particular point, the phrase that often comes into use is, is it's good faith? Now what we're saying about good faith is the use of the kinds of things that you have to do in various kinds of arrangements in order to make them robust. So that you in effect acted in bad faith, then it turns out that I don't have to do this at all. And so, what Roman law does is it develops bona fide contracts, and those are typically sale, they're contracts of hire, contracts of partnership, and contracts of agency, which we'll talk about. And then there are other promises, like loans and so forth, which tend to be strictly juris], and there are a third class of contracts known as real contracts, in which it turns out that what you do is that you have various kinds of gratuitous arrangements, and you have to sort these things out. So, what the Romans do, is they develop a very elaborate system, and the genius of what they've done, is they seem to get the right categories for the various kinds of arrangement, and they're seen as the first approximation to get the right substance of rules as default terms for each of these kinds of arrangement. And for the most part, what they do is they allow, but only occasionally you to vary these candid terms to do something else. Now why is it there tends to be relatively low variation from the standard background term and a lot of it has to do with the fact that parchment is expensive, that agreements are hard to do, and if it turns out that you have a very reliable set of default terms, everybody can rely on those without having to draft these large agreements and so on. Even today default terms dominate ordinary casual transactions. Every time you go to the supermarket, and you enter into a transaction and so for, you do not go up to the teller or to the cashier and say you know what, I'm buying these potatoes, but if it turns out if I wanna open of them up, and it's rotten, then I'm gonna bring it back to you. Or what happens is when the potato is rot, you say, you delivered rotten potatoes, they say, oops sorry about that, take it, here's another potato, here's your money back, and what that turns out to be a warrant of merchantable quality. We don't call it that, but the moment somebody describes this sort of situation, it turns out that we know exactly what's going on. And so, this process of implication into contract, is essential challenge about the way in which this thing works, and at this point instead of having a general theory of vitiation of contracts because of force, mistake, non disclosure and so forth, we have a much more articulated system, which starts to deal with the implied terms of particular contract. PUBLIUS: How many basic types of contracts are there? RICHARD EPSTEIN: Now, as I mentioned there are four classes, or three classes of contract that we care about. These are the real contracts, the formal contracts and the consensual contract, there's a forth class called literal contracts, nobody actually knows what they mean or how they work, so we're just going to ignore them and start with the real contract. So, what is a real contract? How does it start to take place? Well, essentially these are contracts, which under their formal articulation are said, that they're not enforceable when they're fully executory. They're only enforceable when a piece of property, a race, a real thing, has been handed over from one person to another. So the first thing you have to understand is, what does this word, not fully enforceable in an executory fashion mean? Essentially in a world of fully enforceable executory promise, if I promise to you and you promise to me, each of us is entitled to sue, even if they have yet to perform, there maybe obligations to tender, but they don't have to wait until they've done something in order to sue. And that means in effect in contracts of sale, these things are highly stable because of your ability to recover lost profits before you actually turnover something to somebody else, who is simply not going to be able to pay for it. If you don't deliver the goods, you can't act as though you have delivered them and get the full price, and so we have different measure of damages, which is part of the difficulty associated with these contracts, and why it is that the law to fully exposit them, can take a very large and complicated volume when you go through all these variations. Now the real contracts are not for the most part commercial contracts, they are gratuitous contracts, and so the first of these contracts is called “mutuum”. Now what this sort of means is 'from me to you'. What's this situation? Well, the first question you always ask is have you ever entered into a contract for mutuum in your life, and if I were to look at the typical view is I don't even know what the world you're talking about. I certainly haven't done anything so foolish as to enter into a contract that I've never understood. But of course you've entered into contracts of mutuum for a thousand times, you just don't call them that. You understand what the rules are, because you're essentially a slave to the natural law principles that we started to talk about from the beginning. So, let's say contract in mutuum and what are its incident? Well, suppose it is you're late at night, and the stores are all closed, and you need to have a stick of butter in order to make your dinner. So you go to your next door neighbor, and you say, can you lend me a stick of butter, and then the neighbor says, sure, and gives you the stick of butter. Now, it's hard to call this thing a loan. Why is that? Because you're not gonna return this particular stick of butter. What you're gonna do is you're gonna use it on the frying pan and make your particular dinner and tomorrow when you go to the store, what you're gonna do is buy the same brand of butter and the same quantity and give it back to them. And so what happens is, this contract becomes enforceable, not at a promissory level, but only when the stick of butter is delivered. That's what a real contract is. And so, why would we want to have that arrangement? Well suppose we did it the other way around and somebody says this evening I'll give you a stick of butter, and then the evening comes, and they don't want to do. Do you really want to have a lawsuit to sue for the tiny amount of money that's involved in this case? And the answer is, nobody thinks that way, just ordinary expectations are, if they decide that they're not going to perform, you maybe a little bit miffed at them, but you'll get a stick of butter from somewhere else. But once you've given the stick of butter, now there's a much larger stake on the table, and so you have to basically return a stick of butter of like, quality, and kind. Why is it that you have to do that? Well because otherwise, what happens is transfer of resource and unjust enrichment. You get a very nice stick of butter of high quality, and you return an inferior brand, it's as though you received 10 dollars on the one side, and you're returning eight dollars for a two dollar gain, so the transaction is that. Then there's the question about what it is you do if it turns out after the thing is delivered, somehow it all doesn't make it into the pan, somebody drops it or breaks it. And here the Roman maxim is perfectly clear. There was a maxim, which was known as “res perit domino”, which means that the thing, perishes “domino,” for the owner. What happens is, you have not borrowed the thing to return this thing, you've borrowed it as a loan for consumption, so if it turns out that the thing is not consumed, the risk falls on you, because you're in control and in possession of the thing, and it would be very hard to say, most people would agree, if when I get the stick of butter, and I drop it by mistake into a dirty place in the house, and I can't use it, then I can say to the fella, I screwed up in the way in which I manage this property, so therefore I don't have to return it to you. The usual correct rules we want to put incentives on the party in possession of the thing to keep it safe, and the best way we do that is to say okay, risk is on you, you still have to repair the damage. Now the next question you have to ask, is well what about interest on this thing? Well, conceivably you could borrow a stick of butter and wait six years before you return a like stick of butter, and then if the stick of butter was worth 10 dollars, you're gonna have the interest on 10 dollars. But mutuum contracts don't work like that. You borrow the stick today, and it turns out that you return it tomorrow or the next day, thinking about interest kind of arrangement is quite bizarre given it's such a previllous stuff. The other thing to note, is that these mutuum contracts are extraordinarily common, so I borrow a stick of butter from you today, and you borrow a pound of sugar from me tomorrow, if in fact these things have a kind of reciprocity, the whole interest terms starts to clatter out. And so what we say in effect is that there's no interest on these arrangements. PUBLIUS: What about contracts that deal with much larger transactions? Do the same rules apply? RICHARD EPSTEIN: And then somebody says, well suppose this becomes a really big sort of transaction, we're not just talking about a pound of sugar, we're talking about a boat full of sugar. Well at this particular point when the stakes are gonna start to be higher, what you do is you start to switch this thing around. Generally speaking, you could have it as a contract of art. But often times what you'll do is you'll say, since we want this thing to be financial, what we'll do, we'll make it into a contract of sale, and the moment there's a contract of sale, then it turns out you're paying money rather than returning the like kind thing, which is in the ordinary commercial, here is what you want to do. Generally speaking, if you buy something for resale, you don't wanna return it to the original dot, the gain comes from its resource resale, and so now you switch the form and now the contract of sale will start to take over, and since that's a real business transaction, the executory enforcements starts to make a lot more sense. And the last point to understand about this contract, about mutuum, is that there is not necessarily consideration for the enforcement. The original situation is a favor to one person, so the contract is thought to be gratuitous, and since it's a favor, generally saying you can't enforce a gratuitous promise in fact and make the guy deliver the pound of butter. Whereas if it's a contract of sale, and it turns out that he doesn't perform, you can either sue to get specific performance of the thing, if it's available, or to recover your loss profits if it turns out that it's not. So the Romans have this and mutuum is just one of these little contracts. A much more important class of contract, which is a kind of real contract, are contracts of bailment. And again you ask a typical question to most individuals, what is a contract of bailment? And they look at you as though you're speaking a foreign language. You ask a further question, have you ever entered into a contract of bailment? They would say, I've never done anything so immoral as that in my life. But in fact, everybody enters into contracts of bailment, many times a day. So let's give the simplest form of bailment. What happens is that it turns out you're going into the bank, what you need to do is to fill out a form, and you forgot to bring a pen, so you go to the teller and say teller, can you please lend me a pen, is the term that would typically use. The teller says sure, and what happens is you then fill the thing out. Well now suppose what happens is having said all this, well you say, thank you for the pen, put it in your pocket and start to walk out of the store. And somebody will say, well this is not a gift, this was a loan. And so, there's a sheer obligation to return under this thing, and even if they say, could you give me a pen as opposed to lend me a pen, in the context of the store type arrangement, everybody understands what the arrangement turns out to be. And the interesting feature about this social arrangements is that statements about intent and about your state of mind, far from being unavailable, inaccessible, remote and confused, it's so obvious that what happens is the jaws would start to drop, if it turned out that having received this pen in this particular context, you treated it as though it were a gift of your own. It's just not what was understood, and the same thing is, if you borrow from your neighbor in a classroom a pen, in order to fill out a form and so forth. So we all understand what these bailment arrangements are, and we understand what the fundamental obligation is. And so the definition of a bailment is essentially a contract in which property is delivered, that's the real part of the contract, under an obligation to return it after the particular period of use is over, and it's a very powerful kind of relationship, which we all understand. PUBLIUS: How can simple arrangements help us to understand more complex ones? RICHARD EPSTEIN: Now, is it a simple relationship or not? Well the answer is, the shorter the duration of the bailment the simpler the thing is. So, if it's a question of simply borrowing something for 10 seconds to fill out a form and then giving it back, you're not gonna see the bank saying, you know, I lent you the pen, but you took some ink of the pen when you put it on this piece of paper, and now it was basically a transfer to you of the thing, you have to pay me for that. People are gonna start looking at you as though you're crazy because of the usual wear and tear and ordinary use kinds of limitation, and so you return the thing and you're done. But now, what's gonna happen if the uses become more intensive, and it turns out that the gap between at the time that the property is given, and the time that the property is returned, starts to increase, and the various purposes for which these things start to change in one way or another. And so what the Romans did, in quite an extraordinary fit, is they developed a six fold classification of bailments, I never quite remember them all, but the basic point is that some of them are for the benefit of the owner of the property, some of them are designed for the joint benefit of both sides, some of them are designed for the exclusive benefit of the party who lends the thing. These things are gonna have much longer times. And now bailment contracts at this particular point, start to become very much more complicated, and so what are kinds of issues that can start to arise? Well, the first one that I mentioned is “pro cui bono,” for whose benefit is this particular arrangement made. Sometimes what would happen is that I will come to you say, I'm going out of town, what I would like you to do since I have this particular book or a statue, I can't leave it in my apartment because I don't trust my roommate, will you put it in your house and hold it for me until I come back, and that's called a contract of deposit. The clear understanding about this arrangement is that you will return it when the person returns and give it. But now, something bad starts to happen in the middle, or some complications take place, what is to be done? So, suppose what you do is, normally when you get a statue like this, you put it in a room ,which has a safe, and you lock the door. But in this case you're a little bit lazy. Now what you do is you leave the other guys stuff outside of the house, and now somebody turns out to rob the house and to take this thing, and the question you're going to have to ask is whether or not the bailee is responsible for the loss of the thing, if he did not in fact put it inside the safe. The rule in this particular case is not a very exacting standard, the Roman intuition, which is every bit as strong today as it was then, if you're doing somebody a favor, they can't ask for you to do something, which you may not be able to achieve, which they would be able to do if you were a merchant or a commercial party. And so in this particular case, if it turns out that you put the thing in the safe and handled it the way you would handle your own property, and some guy comes in and cracks the safe and takes your stuff and his stuff at the same time, nobody is going to allow the bailor to recover. The risk of loss will not have passed under those circumstances. Well and in fact you didn't put the thing in the safe, and it was a trivial attitude, then we say at this particular point since you don't take the care of somebody else's goods, that you take care of your own, we can argue that this sort of verges on a bad faith type situation, because the understanding when you gave this stuff is that you want him to do with your property what he does with his own property. And so at that particular point, the case for liability is going to be much stronger in terms of the way in which this thing happened. So, now the first thing you've done is you figured out in a bailment type arrangement, which is gratuitous, what do we do if we're dealing with a situation in which a third party comes in and messes up the overall situation by theft. But of course property can be destroyed in all sorts of other ways, and so now suppose what happens is, what you do is you give the thing to the bailee and huge storm comes up, and it wipes away the house and destroys everything in that house of the owner and your stuff. And the usual rule if this was mutuum would be Race Paradomino, you bought the sugar, you take the risk. But here you haven't bought anything, and so the typical argument is that when it comes to an act of God that's beyond the control of anybody, and virtually every case the risk falls on the owner of the property, rather than the person who has engaged in this one way or another. So, that's the second question, well then you get a third question, you could start to see how these things start to expand. What happens is that you lend a thing, and the guy decides, you know, I'd like to use it in a party that I ... so you take it out of the safe for the moment, you put it on the counter, and somebody knocks the thing over, and it's that. And so the question you have to then ask is whether or not this counts as an authorized use of the question, and of course you don't have any particular things to tell you about an explicit arrangement. This particular party only became a possibility after the bailment had been made, rather than before. So the general rule with respect to a bailment, is that you are not supposed to use the thing for your own private benefit, and if you basically deviate from that rule, then it turns out that you're going to responsible. PUBLIUS: What about situations involving third parties? RICHARD EPSTEIN: What you do with this first class of deposits, is you then start to figure out all of these arrangements, but then it just keeps on going. So the next thing you do, is you say, well you know, I can't really deal with this thing, because I'm going out of town, so what I'm gonna do is to give it to my friend as a sub-bail, and they'll take care of it, but you do it without authorization. Well, who takes the risk if something goes wrong with the sub-bailee, is the kind of question you're gonna have to ask. And the general rule it's probably the bailee rather than the bailer. But suppose the bailee in fact takes every bit as good care of the thing as the bailer, then it may go back in the other direction. So you're trying to fill in all of these kinds of arrangements, and it gets to be very complicated. And so, that's the case in which it turns out you're doing for the benefit of the other side. But now suppose what you do is when you lend it to somebody, you're doing it for his use. So what you do is you give him all this statue, or you give him the dishes and so forth and you know that party is gonna start to use it for a party, or when you do is you give somebody a horse, and you know that somebody is going to use it. So the question then is, what happens if there's a kind of a risk that takes place in the ordinary use of this thing? Does the risk fall on the bailer or fall on the bailee? You can start to see it's just not quite as clear as you might wish as to which way it would go. And so the easy cases are not too hard to identify. What you do is you say, yes you're gonna use it for a dinner party, and then what you do is you have a rather rockers dinner party, where you take all the silverware. and you start treating it as Frisbees up and down the room, and it's quite clear that that clearly goes outside the scope of a bailment ,and the famous example in Roman time is I lend you a horse, and I say it's yours to use and to ride, and what you do is you decide now to go heltah skeltah in a gallop in a very dangerous course, and the horse is injured. And the answer is no, we didn't mean that the scope of the consent went for any old use that you had, it only went to the kinds of uses that are consistent with the long term safety of the animal. So the risks are going to start to move in this direction, in one way or another. So you get the second class of bailment, and then suppose what you do is pawn property to somebody else. Well that particular case, he's not supposed to use it at all. You've lost the value of the property, he's lost the value of the property, he's got to return it when you pay the interest and so forth. But if in fact it turns out you default on the arrangement and then the property becomes his, and he can start to sell it to somebody else. In earlier times, you have all of these bailments, you have to figure out standards of care, what you do with acts of God, what you do with wrongful acts of third parties and so forth. And the Romans were quite relentless and meticulous in the division that they had with respect to these kinds of cases, and how well does this last. There's a famous English case called Coggs v. Bernard, which was cited by chief justice Holt around 1703, and so forth, and he's trying to develop the English law in bailments, because people lend things out for dinner parties in the Great Britain as they do in Roman time, and what he does is he basically bodily lifts up the same standards that the Romans had and makes them into English law, using the Roman names for all the particular contracts in question, and all the particular variations that we see. There is in effect when you are doing this stuff just an absolutely tremendous continuity between the law. What then happens in modern times and I'll finish on this note for the particular area is what happens is the Romans had this very strong system of classification. They put something into this category, into that category. What they therefore did is for each category they would assign a series of rules which dealt with the mishaps that happen under various kinds of arrangement because the only times these bailment issues become an issue is when something actually goes wrong. When you just take the pen and return it nobody nobody even thinks that there was a contract, but it surely there were. PUBLIUS: Why were the categories so important for the Romans? RICHARD EPSTEIN: What the Romans believed is that what you did is you did the hard categories. Essentially what you then did is you dealt with marginal cases and ambiguities on an ad hoc basis to put them into one category or another. You would start to do that with respect to bailments and you could do the same thing with respect to the occupation for example when you are a trespasser. You are a social guest on the one hand or you are a business guest. Then we give you legal rules to figure out what the risk of liability are. They are the exact same principles you use in other areas, whereas for mutual benefit there is a higher standard of care.Whereas gratuitous the party who is doing the favor gets the benefit of the doubt on these cases and so on down the line. When you get to modern law, the common law I think goes wrong today. What we do is we do this stuff as a reasonableness standard, but there's a subtle change in the way in which the rules work. The Romans stuff was the categories had to be right and the difficulties came in dealing with marginal cases. What the modern law tends to do is to say, "Look, we don't trust these categories. We are going to have sliding scales of reasonableness that go from one end to another and we are not going to have these hard lines." What happens is in this system with the continuity you don't have to worry about the borderline cases because there are no borders, but the greater failing is this, if in fact human conduct is highly regular so that the probability of getting yourself into one of these marginal cases is relatively low the better business judgment is to give you clear rules that cover 98% of the cases and worry about the 2% of the cases later rather than to jeopardize the 98% of the cases 'cause you are not quite really sure what's going to be required and leave it to everybody else's imagination. This then becomes in modern terms the rule v. standards debate. There may be circumstances where standards are certainly going to be appropriate, but by and large they are not going to be in everyday relationships. Why is that? Because when people organize their own lives in dealing with small transactions, they are really not particularly congenial with the type of situation in which they don't know where they stand. If you are trying to figure out how you give people instructions to resolve disputes outside of the framework of a legal system on a category approach and the normal standards are there. The genius is to get the right rules and the Romans did that because they understood that gratuitous promises were a really important class of cases. It may not be executory enforcement, but there are all sorts of things that take place once a transaction is started before the thing is completely unwound. Then when we come back to this stuff what we are going to do formal contracts and figure out how it is that the deal from the real contract before we turn in the final part of this thing to the consensual contract. All of this stuff being relatively complicated. 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