Contractum trinius

Template:Short description Template:Italic title Template:Canon law Template:Use dmy dates The contractus trinus, contractus triplex, or simply triple contract, is a set of contracts used by European bankers and merchants in the Middle Ages, notably by the Fugger family, as a method of circumventing the canon law prohibition of usury.

Some Muslims are of the view that the present practice of Islamic banking relies on devices similar to the contractum trinius as a means of working around a ban of riba (usury) in religious scripture.

Concept

A series of three separate contracts were offered to loan applicants: a partnership contract (societas), a contract of sale (emptio-venditio), and an insurance contract (assecuratio). Each of these contracts was permitted by canon law, but together they had the substance of an interest-bearing loan.

The triple contract worked as follows: the lender invested an amount equal to the amount of financing requested by the borrower for one year, in exchange for which the lender then took out insurance on the investment with the borrower and sold the borrower the right to any profits made over the period at a predetermined percentage. This system thus makes it possible to reproduce the effects of a loan with any interest rate agreed between the parties, but also has the advantage of protecting the creditor against the debtor in the event of insolvency and of circumventing the prohibition of usury.Template:Fact

Reception

Critics

Until the beginning of the 16th century, the triple contract was universally condemned by Catholic jurists and theologians because it constituted a loan with implicit interest.Template:Sfn Thus, Thomas Cajetan, Francisco de Vitoria, Domingo de SotoTemplate:Sfn and Template:Ill criticized it in the name of the scrupulous application of the prohibition on usury. Following their opinions, Pope Sixtus V condemned in 1586, in his bull Detetabilis avaritia, the practice of commercial credits, illustrated in particular by the triple contract.Template:Sfn

Wolfgang Musculus, although a protestant theologian, had a nuanced opinion on the triple contract: although he could tolerate it, he nevertheless considered it morally reprehensibleTemplate:Sfn in that investors, too preoccupied with the love of money, no longer practiced charity.Template:Sfn He also asked the authorities of the Holy Roman Empire to prohibit all usurious and illicit contracts.Template:Sfn This position would later have a great influence on Lambert Daneau.Template:Sfn

Defenses

As legal pillar of commercial capitalism,Template:Sfn the triple contract was nevertheless defended for its practical interest. Thus Johannes Eck was the first to defend the validity of the triple contract in 1515, during a meeting organized by the Fugger Family.Template:Sfn

If, as previously indicated, the first members of the School of Salamanca were critical of the triple contract, the later members were on the contrary quite lively in their defenses of the practice. This is the case of Leonardus Lessius who, after a thorough examination of the respect for equity within the various contracts usedTemplate:Sfn and a rejection of the arguments of his predecessors,Template:Sfn seeks to legitimize commercial practicesTemplate:Sfn and regrets a ban that, according to him, harms the interests of society.Template:Sfn

At the end of the 17th century, most Catholic moral theologians validated the practice of the triple contract. As the Protestant theologian Gisbertus Voetius notes, many papists such as Juan Azor or Johannes Malderus now defend this practice.

See also

• Christian finance
• Discretionary deposit
• Round-tripping (finance)
• Substance over form
• Islamic finance

External links

• An essay comparing Islamic banking practices to the contractum trinius