The Dual Origin of the Duty to Disclose in Roman Law

Abstract

The Roman law remedies for failure to disclose in sales contracts where developed by two different institutions: the aediles, with jurisdiction on market transactions effected through auctions, and the praetor, with general jurisdiction including private transactions. The aedilitian remedies — the actiones redhibitoria and quanti minoris — allowed for rapid transactions and inexpensive litigation but generated some allocative losses ex post, as they did not enable the parties to exchange information about idiosyncratic characteristics of the goods for sale. In contrast, the remedy developed by the praetor — the actio ex empto — implied lengthier transactions and more expensive litigation but eliminated the ex post allocative loss, as it fully protected the buyers’ idiosyncratic interests. Our analysis reveals that these Roman law remedies maximized the value of the underlying contracts and sheds new light on how differences in the lawmaking institutions affect the law produced by them.

Keywords: restitution, rescission, contract damages, breach, duty of disclosure, actio quanti minoris, actio redhibitoria, actio empti ad redhibendum, on and off contract remedies

JEL Classification: K20, L22, L23, N83