Citation: 11 Law & Hist. Rev. 1 1993

Content downloaded/printed from HeinOnline (http://heinonline.org)Thu Feb 13 04:47:28 2014

-- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at http://heinonline.org/HOL/License

-- The search text of this PDF is generated from uncorrected OCR text.

-- To obtain permission to use this article beyond the scope of your HeinOnline license, please use:

https://www.copyright.com/ccc/basicSearch.do? &operation=go&searchType=0 &lastSearch=simple&all=on&titleOrStdNo=0738-2480

Freedom of Contract and Restraint ofTrade Clauses in Roman and Modern Law

ANDREAS WACKE

The interplay between the Roman economic and legal orders is one ofthe most important areas calling for research and analysis. There is nolack of excellent descriptions of the economic life of antiquity' Incontrast, legal-historical enquiries into the legal-economic issues of Ro-man times are still in the initial stages. This dearth of research is mainlythe result of the unsatisfactory state of Roman legal sources, whichrarely deal with economic issues. It is a stroke of luck to find sufficientdocumentation on any specific topic. One such fortunate case, that ofrestraint of trade, exists. There are no fewer than seven Digest texts onthe topic. These will be analyzed below, in conjunction with a com-parative survey of the development of this aspect in modem law.

This article is a summary of "Wettbewerbsfreiheit und Konkurrenzverbotsklauselnim antiken und modernen Recht," Zeitschrift der Savigny-Stifiungflir Rechtsgeschichte,Romanist. Abt. 91 (Wien/Kln, 1982), 188-215. Most important former publicationsin this regard are: A. A. Schiller, "Restraint of Trade in Classical Roman Law," inMnemosyne Pappoulia (Athens, 1934), 222-44 [this article is not republished in theauthor's collected writings: A. A. Schiller, An American Experience in Roman Law(Gdttingen 1971)], and G. Provera, "Visuali romanistiche in tema di patti di nonconcurrenza," I1 diritto dell'economica 6 (1965): 789-914; also Annali Camerino 31(1965): 223-51.

1. General literature on Roman economic life: M. . Charlesworth, Trade-Routes andCommerce of the Roman Empire (Cambridge, 1924, repr. Hildesheim, 1961); E deMartino, Storia economica di Roma antica, 2 vols. (Florence 1979), [German translation:Wirtschafisgeschichte des alten Rom (MUnchen, 1985)]; R. Duncan-Jones, The Economyof the Roman Empire, 2d ed., (Cambridge, 1982); M. I. Finley, The Ancient Economy(Berkeley, 1973); E Heichelheim, An Ancient Economic History, 3 vols. (Leiden, 1958-70); A. H. M. Jones, The Later Roman Empire 284-602: A Social, Economic and Ad-

Andreas Wacke is professor of Roman law, German private law and civilprocedure, and director of the Institut ffir Rt~misches Recht, University ofCologne.

Law and History Review Spring 1993, Vol. 11, No. 1© 1993 by the Board of Trustees of the University of Illinois

Law and History Review

I

The ground rule of the Roman emperors with regard to privateeconomic activity may be described (in line with Rostovtzeff and Hei-chelheim, the "Classicists" of ancient economic and social history) aslaissez-faire liberalism, which only sought to regulate to a limited extentthe production of mainly agrarian and household goods, as well as theirdistribution on the predominantly small-scale markets. State controlwas guided mainly by two considerations: to open up the necessarysources of revenue to the taxman, and to serve the needs of the pop-ulation of the capital city, Rome. State expenses were funded by meansof taxes and toll levies, as well as by a number of domains and mo-nopolies belonging to the state, particularly mining. The supply ofprovisions (foodstuffs) was undertaken by state officials within the frame-work of the annona;2 they operated in conjunction with privilegedindividuals such as the owners of sea-going vessels. A third goal (par-ticularly important in our time), the provision of jobs and the securingof decent employment for great numbers of the population, was beyonddoubt a beneficial effect (or at least side effect) of the extensive publicbuilding works, the construction of streets and aqueducts, city wallsand fortresses, temples, and fora. What importance was actually attachedto this last consideration cannot be gauged conclusively from what hasbeen handed down to us.

The market-economy principle of free competition remained, by andlarge, undisturbed by these state activities, which were important, butwhich remained peripheral to the general economic system. The generalview is that taxation was not used as an economic control function. Tosafeguard the food supply, however, there were prescriptions relating towhat had to be cultivated, as well as export limitations for agriculturalproducts. The latter was particularly aimed at restraining the productionof wine (which was more profitable) and advancing the production ofwheat (which was more important). The Classical jurists affirmed inexpress terms that the agreement on the price in a given contract wasleft to the discretion of the parties to the contract, and that they werealso allowed to snatch a bargain (invicem se circumscribere) (for ex-

ministrative Survey, 2 vols. (Oxford, 1973); M. Rostovtzeff, The Social and EconomicHistory of the Roman Empire, 2d ed., 2 vols. (Oxford, 1957).

2. E. Tengstrom, Breadfor the People: Studies ofthe Corn-Supply ofRome (Stockholm,1974); G. Rickman, The Corn Supply of Ancient Rome (Oxford, 1980); H. Galsterer,"Plebiculam pascere: Die Versorgung Roms in der Kaiserzeit' Critica Storica 27 (1)(1990): 21-40.

Freedom of Contract

ample, Paul. Dig. 19.2.22.3). Price undercutting by competitors re-mained theoretically permissible, even after Diocletian's grandiose Max-imum Price Edict in 301 A.D. Usury was nearly always prohibited bystatute. The public officials also acted against grain profiteering, par-ticularly in later times, when criminal sanctions were invoked againstthe dardanarii and other instances of private monopolies. But thesemeasures remained more or less isolated instances. According to theincisive research of Waltzing and Mickwitz, it was not part of the taskof the professional bodies or guilds (collegia) to regulate competitionor price levels.3

The occasional efforts to form cartels or monopolies cannot be com-pared with modem equivalents. The merchant cartels of the dardanariiwere characterized by the brevity of their duration; in this respect, theyare fundamentally distinct from modem industrial cartels and monop-olies. Modem monopolistic enterprises are based on expensive technicalplants and equipment, which a prospective competitor cannot set upat the drop of a hat. The merchant cartels of old, on the other hand,could, in practice, prevent a competitor's activities in the market placeon a seasonal basis, but not permanently.

II

Measures to promote private competition in order to keep pricesdown, comparable to modem antitrust laws, were unknown in antiquity.However, it is clear that the legal order of the time did have regard tothe market-economy principle of freedom of professional activity:

Digest 1.18.6.4 (Ulpianus libro 1, opinionum): Neque licita negotiationealiquos prohiberi neque prohibita exerceri neque innocentibus poenasirrogari ad sollicitudinem suam praeses provinciae revocet.

The provincial governor must make it a matter of especial concern thatno one be prevented from carrying on any lawful business, that no onecarry on prohibited activities and that no innocent persons have penaltiesimposed on them.

It was therefore the task of the provincial governor to see that legit-imate commercial enterprises of the inhabitants were not interferedwith, that illegitimate activities were not pursued, and that no one

3. J. P. Waltzing, ttude historique sur les corporations professionelles chez les romains,4 vols. (1895-1900, repr. Hildesheim, 1970), 1:181-190; G. Mickwitz, Die Kartellfunk-tionen der Zanfie (1936, repr. Amsterdam, 1968), 166 et seq.

4 Law and History Review

suffered punishment for innocent activities. It is clear from the expo-sition that the prohibition against unlawful trade activities constitutedan exception. Such a prohibition could rest on two grounds: first, anaccused could be prevented, through the imposition of a court sentence,from pursuing his occupation. Second, in some rare cases, certain ac-tivities such as games of chance, sorcery, or divination (astrology), couldbe restricted or even banned on the grounds of public interest. Inferioroccupations, such as acting or that of free men recruited as gladiators(auctorati), were not formally banned, but it was regarded as sufficientto stigmatize them with the brand of infamy and therefore with socialdisdain. All of these constitute, as we have said, exceptions. It is clearthat, generally speaking, the pursuit of occupations in the Roman Re-public as well as in the Principate was regulated less vigorously than itis today-this even applies to the training of doctors. Therefore every-one could (from a legal point of view at least) enter into any occupation.

Although the primary task of the provincial governor was the pro-tection of freedom of professional activity, we cannot infer from thisthat there was a special office (or at least a particular official) under theprovincial governor comparable to modem trade supervisory offices. Inthe context of the otherwise broad catalog of powers of the provincialgovernor, the supervisory task presently under discussion does not re-ceive much emphasis (compare the limited attention paid to it in thetext). The text does not mention which measures were to be taken toensure professional freedom. These were undoubtedly left to the dis-cretionary coercive powers (coercitio) of the governor. This might leadto sporadic, ad hoc actions in response to complaints, rather than generalpreventive measures. Basically, the governor is urged in the extract todo what is in any event the proper thing to do: promote what is lawful,prevent what is unlawful, and (to put it in modem idiom) respect theprinciple of legality in administrative action. Furthermore, the governorshould actually prevent the performance of illegitimate (and particularlyof contra bonos mores) contracts. Individuals often adhere to agreementsof this nature, as both parties to the deal derive advantages from it(compare, in our modern context, unlawful employment). Read in thisway, the text constitutes a coercive public-law supplement to the private-law penalty of invalidity (which is often ineffective in practice).

It is a matter of some dispute whether the six libri opinionum, fromwhich the first text is taken, can truly be ascribed to Ulpian.4 Theremay be justification for suspecting that the work is, on the whole, a

4. B. Santalucia, I libri opinionum di Ulpiano, 2 vols. (Milano, 1971) defends the

Freedom of Contract

compilation of post-Classical origin. Nevertheless, our passage on gu-bernatorial responsibilities can be attributed, both as far as content andstyle are concerned, to late-Classical law.' The work can rightly bedesignated a main source with regard to our topic, as two further textsof the Digest derive from it.6

III

The basic freedom to compete also appears from the (somewhat morenumerous) texts dealing with the second aspect of our enquiry, namelythe extent to which an entrepreneur can, within the context of privatelaw, prevent competition. By comparison, we now take a look at theprivate law of modern Germany, which is parallelled in this regard inall West European states.'

The prohibition of competition for the duration of employment isnot problematical: It arises, without any express clause to this effect,out of the fiduciary duty owed to the employer. This is the position incompany and partnership law.9

work as authentic; against him, however, more or less doubting the reviews by Wieacker,Labeo 19 (1973): 196ff.; especially Liebs, Tijdschrifl voor Rechtsgeschiedenis 41 (1973):279ff.

5. Compare the striking similarity to a phrase in a constitution of Philippus (244-47 A.D., from the time of Ulpian's disciple Modestinus): Proconsule, si quid iniuriosegeratur ad sollicitudinem suam revocabit (Corpus Inscriptionum Latinarum = CIL IIIS 14191 - Bruns Fontes luris Anteiustiniani I, 1909, 265 Nr. 93); and still earlier, ina testamentary clause, Scaevola in Digest 33.1.13 pr.

6. Digest 37.14.2, 8.4.13 pr., see below, parts 4 and 7.7. Literature: A. Hueck and H. C. Nipperdey, Lehrbuch des Arbeitsrechts, 7th ed.

(Berlin, 1963), sect. 38; J. v. Gierke and 0. Sandrock, Handels- und Wirtschafisrecht,9th ed. (Berlin, 1975), sect. 24, 11.3 and V.

8. A survey of the states belonging to the European Economic Community: HeinzeBetriebsberater (1973), 1262 et seq. For Austria: Migsch, Die absolut geschatzteRechtsstellung des Arbeitnehmers (Salzburg, 1972), 205 et seq. For Switzerland see CivilCode art. 321d sect. 3, art. 340 et seq.; Ren6 Kuhn, Das Konkurrenzverbot im Arbeits.vertragsrecht (Muri bei Bern, 1981).

For South African Law. E. Kahn, "The rules relating to contracts in restraint of trade,'South African Law Journal (1968): 391; B. du Plessis and D. M. Davis, "Restraint oftrade and public policy" South African Law Journal(1984): 86; C. Visser, "The principle'pacta servanda sunt' in Roman and Roman-Dutch law, with specific reference tocontracts in restraint of trade," South African Law Journal (1984): 641-55; J. T. Schoom-bee, "Agreements in Restraint of Trade,' Tydskrif vir hedendaagse romeins-hollandsereg (1985): 127-51.

9. As expressed in the German HGB (Commercial Law Code) sects. 60f, 112, 113,165.

Law and History Review

A contractual restraint-of-trade clause imposed for the period aftertermination of a contract of employment is more problematical: In thiscase, a fundamental conflict of interests arises between employer andemployee. Employers wish to protect themselves against impendingprejudice, namely that former employees may take their experience,technical and specialized knowledge, trade contracts, and personal con-tacts with clients that were acquired during the course of employmentto a competitor.

Employees, on the other hand, aim for a free and possibly moreprofitable application of their acquired skills. If contractual restraintclauses were allowed on an uncontrolled basis, the danger would arisethat the employer would, by reason of his stronger bargaining position,place greater limitations upon the professional development of his em-ployee than was required to protect his legitimate commercial interests.

Second, an onerous restraint clause can, even during employment,cause the employee to be so dependent upon his employer that theformer lives in fear of the termination of his contract. In this conflict(which is ultimately one between freedom of contract and professionalfreedom) the task of the legislature is to achieve, by weighing up, aproper balance between the interests of the employer in protectinghimself against the revelation of his trade secrets and the filching of hisclients, and the no-less-legitimate interests of the employee in earninghis living even after leaving his position, that is, not to be hindered inhis choice of the type and location of his work. By enacting restrictiveprovisions, the legislature has to provide clear parameters for the law-fulness of contractual restraint clauses.

When the medieval guild system held sway, there was no need forsuch protective provisions. The guild system was based on the com-prehensive exclusion of competition. As the number of guild masterbusinesses was limited, it was difficult for a craftsman to become es-tablished. It was also difficult to change one's employment within aguild context, by reason of prohibitions against the drawing away ofanother's employees. One guild member was not allowed to completethe work begun by another. The joint purchase of raw materials andattempts to regulate prices by agreements were ultimately aimed atproviding each guild member with a decent living and at providing forhis dependants after his death.

It was only upon the introduction of freedom of competition, withthe abolition of the feudal laws of restrictions and enforcement ("Zwangs-und Bannrechte"), that the need for a statutory regulation of restraintsof trade arose. The General German Commercial Code (ADHGB) of1861 was silent on this conflict of interest. Its successor, the Reichshan-

Freedom of Contract

delsgesetzbuch of 1897, protected commercial assistants through a lim-ited number of rules (§§ .74, 75 HGB). As these turned out to beinsufficient, a new act was passed in 1914 to reform these rules (now§§ 75 to 75f HGB) for the benefit of commercial employees. This orderof things (which still prevails) came about as a result of the bargainingskills of the trade unions representing commercial employees.

There is general agreement in modern German law that any restraintof trade, operating after termination of the main contract, cannot bejustified simply on the basis of a general legal duty derived from theoriginal contractual duties; it requires a specific agreement to this effect.Such agreements in restraint of trade are not regarded as infringing theconstitutional right to professional freedom, nor, generally, as beingcontra bonos mores. Rather, the legislature has recognized that restraint-of-trade clauses are, up to a definite point, essential for entrepreneurs.A large number of cautionary measures have, however, been introducedto protect those subjected to restraint clauses. These measures cannotbe disregarded to the detriment of those whom they seek to protect.To effect this, an express clause must be embodied in the contract thatis handed to the employee. The restraint can endure for two years, atmost, after termination of the main contract. For the duration of therestraint period, the employer must pay his ex-employee "waiting time"compensation, which must be at least half of the remuneration paidup to that stage. (This constituted the main innovation of 1914; thereis often no parallel to this in other countries.) The restraint must serveultimately to protect the legitimate interests of the employer-this flowsfrom the prohibition against oppressive or vexatious conduct-andmust not burden the professional development of the employee unfairlywhen the compensation paid has been taken into account. This reallyamounts to a problem of reasonableness; the employee bears the onusof proof in respect of any allegedly oppressive or unreasonable effectsof the clause. Finally, restraint clauses may not, in any way, operate tothe detriment of those receiving meager wages.

IV

The limited number of texts in the Digest dealing with restraint oftrade after the termination of a contract of employment apparently didnot contribute to the development of modern law. The writings of thePandectists in the nineteenth century wholly neglected them, presum-ably because legal matters relating to trade and commerce were generallyleft to those researching Germanic law (a tradition that, to some extent,

Law and History Review

is still maintained in Germany). Generally, the problem of restraint oftrade of an employee manifests itself to a far greater extent today thanit did in Rome. The reason for this is to be found in the progressivemobility of modem society, which enables a rapid interchange of jobs,and in the high degree of technology involved in the manufacturingprocesses, which requires not only strict confidentiality, but also ade-quate supervision by specialists who have undergone long periods oftraining. In contrast, uniform, relatively immobile, and predominantlyagrarian economic structures prevailed in antiquity. The pressure ofcompetition generally affected the business life of that time far less thanit does today-even when one takes into account that the Romans hadno rules protecting trade marks or trade names. In antiquity, the businessworld was chiefly comprised of small businesses, based mainly on man-ual productive processes with limited mechanization and limited outlets,by reason of the high costs of transport -at least as far as heavy goodswere concerned.

The Roman legal sources deal with problems of restraints of trademainly in the context of the relationship between patron and freedman(libertus). It is no coincidence that the issue arose in that particularcontext. Before slaves were set free, they would often acquire specialknowledge and skills from working in the masters' businesses. If a slavewas set free to administer the estate of his former master as procurator(a representative in terms of a general power of attorney), his livelihoodwas secured. In other cases, he had to establish his own occupation tosurvive after his manumission. His obvious choice would have beenthe occupation he had learned under his former master and presentpatron. For example, the freedman of a medical doctor could becomea doctor himself,'0 and the freedman of a slave-dealer did not begin toagitate for the abolition of slavery, but became a slave-dealer himself.

Moreover, freedmen (liberti) of Roman times formed part of the mosteconomically active and innovative entrepreneurial class. Their freedomof economic activity could clash with the duty of loyalty owed to theirpatron. As slaves, they could not really prejudice their masters in practiceby doing business in competition with them, because all gains of a slaveaccrued automatically to his master (Inst. 2.9.3). But once that slavewas set free, there arose what modern law regards as a conflict ofinterests- probably a more acute conflict than in the modern sense.While the modern employee is bound, after termination of his contract,only by a relatively loose and short (at the longest, two years), "aftereffect" duty, the duties owed to the patron encumbered the freedman

10. Digest 38.1.26, see below, part 6.

Freedom of Contract

for life. His duties of respect (that is, of obsequium and reverentia) didnot merely have an ethical basis, they also had legal consequences. Inall cases, freedmen owed their patrons certain services, and possiblyeven maintenance at a later stage. Moreover, the patron, in certaininstances, had a claim to a part of his deceased freedman's estate.

As modern legislation has intervened to protect the employee, likewisethe Roman praetors of the Republic already sought to protect thefreedman against unreasonable infringements of his personal freedom.As the work performed by freedmen (operae libertorum) constituted amajor economic factor, it is no coincidence that most of the sourceson restraints of trade concerned the patronage relationship. In contrast,free services (that is, services performed by freeborn persons) or laborcontracts were often performed by laborers paid by the day (mercen-narii); highly qualified labor was not involved in this case, and eventoday restraints of trade do not arise in this context.

Did the rights of patronage include the power to prohibit a freedmanfrom entering into competition with his patron? The sources generallyanswer this question in the negative: Digest 37.14.2 (Ulpianus libro 1,opinionum): "Liberti homines negotiatione licita prohiberi a patronisnon debent" (freedmen should not be prevented from engaging in lawfulbusiness by their patrons); and Digest 37.15.11 (Papinianus libro 13,responsorum): "Liberta ingrata non est, quod arte sua contra patronaevoluntatem utitur" (a freedwoman is not ungrateful if she practices herprofession against the wishes of her patroness).

According to Digest 37.14.2, freedmen may not be impeded by theirpatrons from pursuing lawful activities. This text is taken from the samebook of opiniones by Ulpian, from which Digest 1.18.6.4 was taken;1"it is clearly linked to the latter as far as both content and style areconcerned. This is brought home particularly by the use of the samephrasing: negotiatione licita prohiberi. It could be described as a specificrule, the enforcement of which was under the general responsibility ofthe provincial governor, namely to guarantee freedom of trade and toprotect it.

The same opinion is expressed by Papinian in Digest 37.15.11. Afreedwoman would not be acting "ungratefully" if she pursued hercalling (ars sua, for example, as hairdresser or midwife) 2 against thewill .of her patrona. A charge under the lex Aelia Sentia (the penaltyfor which is unknown to us) was thus precluded. A revocation to slavery

11. See part 2, above.12. See S. Treggiari, "Jobs for Women,' American Journal ofAncient History 1 (1976):

76-104.

Law and History Review

by reason of ingratitude (which was only gradually introduced in late-Classical law because it conflicted with favor libertatis, the principlethat liberty should be favored) was even less of a possibility. It is truethat competition in the same business sphere between patron and freed-man is not necessarily presupposed in these two extracts, but it wasprobably so, because in such a case the legal opinion would be of evengreater interest to the patron.

V

Two texts of Scaevola clearly deal with competitive activities. Thesecond one, however, contains an unclear limitation:

Digest 37.14.18 (Scaevola libro 4, responsorum): Quaero, an libertusprohiberi potest a patrono in eadem colonia, in qua ipse negotiatur, idemgenus negotii exercere. Scaevola respondit non posse prohiberi.

I ask whether a freedman can be prevented by his patron from engagingin the same kind of trade in the same colony in which the patron himselfis in business. Scaevola has given it as his opinion that he cannot berestrained from so doing.

Digest 38.1.45 (Scaevola libro 2, responsorum): Libertus negotiatorisvestiarii an eandem negotiationem in eadem civitate et eodem loco invitopatrono exercere possit? respondit nihil proponi, cur non possit, si nullamlaesionem ex hoc sentiet patronus.

Can the freedman of a clothing merchant engage in the same businessin the same community and the same area without the permission ofhis patron? [Scaevola] has given it as his opinion that there is no ruleto prevent him, if his patron will not suffer as a result.

Both texts correspond in principle to the quoted texts by Ulpian andPapinian, in as much as the patron cannot prevent the freedman fromfollowing the same trade in the same city (colonia or civitas) as thepatron. According to the second text of Scaevola, an exception to thisprinciple comes into effect when the patron will suffer loss as a resultof the competition. This clear contradiction suggests an interpolationof the final words of Digest 38.1.45: si nullam laesionem ex hoc sentietpatronus. This is indeed the generally accepted view, which correspondswith that of Cujacius in this regard.

On closer analysis, it appears, however, that the facts in the secondScaevola text are (in several respects) set out with greater precision than

Freedom of Contract 11

in the first. We are told that a clothing merchant is involved, 3 whoconducts the same business not only in the same city (colonia or civitas),but at the same place (eadem loco). This could quite possibly be in thesame street and right next to his patron. The precise setting out of thefacts and the answer stands in clear contrast to the vague final reser-vation, giving good reason for the view that the original text has beenaltered -probably shortened. A patron would always suffer commercialprejudice by reason of competition: If competition is generally allowed,one could not generally prohibit the freedman from competing withhis patron merely because of the risk to the latter's turnover. This is sobecause the patron's existing clientele cannot be guaranteed for all time.Not even price undercutting by the freedman could be called intoquestion. The only activities that could be prohibited would be particularintentional interferences in the business of the patron; for instance, theopening of a shop right next to the patron's business out of malice, orenticing clients by unlawful means. The same would apply to immoralconduct of the type at present prohibited by modem acts against unfaircompetition. This is presumably the meaning of laesio in this context.Furthermore, freedmen may not become so involved with their ownbusinesses that they neglect any services owed to their patrons.

Such specific unlawful acts of the freedman are not reflected clearlyin the proviso in the second Scaevola text where the qualification seemsto hinge simply on the fact that the patron is suffering prejudice. Thequestion of a preventative remedy at the disposal of the patron alsoarises. If a freedman were to neglect his duty to render services, thepatron could use the actio operarum for compensation. He could not,however, by means of the latter, prevent the competitive activities ofthe freedman (see below, part 6). To obtain a prohibition against theexercise of an occupation or an expulsion from the city by means of ajudicial order, the activity would have to amount to truly reprehensiblecriminal conduct.

Despite these queries, the two texts are reconcilable. To allege thatone is dealing with an interpolation is to take the easy way out. Evenwhen freedmen engaged in competition with their patrons, they werenot exempted from their duty to pay respect to them. The specificrelationship of patronage was superimposed upon-and formed a moreconcrete application of-the general rules that governed competition.These rules existed as between otherwise-independent third parties and

13. See generally A. H. M. Jones, "The Cloth Industry under the Roman Empire,"Economic History Review 2, 13 (1960): 183ff., reprinted in idem, The Roman Economy(1974), 350ff.

Law and History Review

were founded on notions of common decency and accepted customs,and, in Rome particularly, on class consciousness and guild membership.Freedmen were not allowed to show any disloyalty to their patrons,even when they were involved in the same calling. In view thereof,Scaevola's second text has three implications: First, freedmen may notneglect their duty to render specific services. Second, they may notengage in unlawful activities when competing with their patrons-justwhen competing with others. Finally, they may not-and this is note-worthy- specifically conduct any intentionally prejudicial business tothe detriment of their patrons, for example, entice away their clients.

By reason of this, freedmen were prohibited only from conductingactivities intentionally prejudicial to their patrons, which would beinconsistent with their duty of loyalty. On the other hand, patrons couldnot prevent them from actually establishing a competitive business. Thepatron had to absorb the loss of turnover and take it into account inweighing up the pros and cons of setting a slave free. If there were apayment for setting a slave free (be it from the slave- redemptio suisnummis-or from a third party), the patron could determine the'amountrequired by taking this issue into consideration.

VI

It appears from the texts that we have discussed that the powers ofa patron did not normally include the power to prevent his freedman,by an order of court, from conducting a competitive activity. This doesnot answer the next question, whether a clause specially directed againstsuch competition would be valid. It could be argued that as patronscould demand performance of positive duties, they could surely dosomething of lesser magnitude, such as the mere prevention of com-petitive activities. This argument, however, that the greater includes thelesser, from operae to mere non operae, does not carry much weight.After all, freedmen couldn't be denied the opportunity to earn theirdaily bread; otherwise their patrons would have to provide it. To denya freedman a profession would not, in truth, amount to a mere minus,a negative duty; it would constitute a more serious infringement ofliberty and independence than the rendering of unpaid services, whichwere limited as a rule to specific daily tasks (the freedman's operae wereregarded in law as being a certum, something defined). If slaves wereset free on condition that they move to a different place, it wouldamount to a serious inroad into the freedman's lifestyle and a consid-erable encroachment upon family ties and personal relationships. Since

Freedom of Contract

the reign of Diocletian, freedmen could freely choose where to live andnot be obliged to live in their patrons' houses: Code 6.3.12 (293): "Quimanumittuntur, liberum ubi voluerint commorandi arbitrium ha-bent .... cum neque cum patrono habitare libertos iura compellunt"(Persons who have been manumitted are at perfect liberty to residewherever they choose .... nor do the laws compel freedmen to live withtheir patrons.)

The praetor would probably protect the freedman with an exceptioonerandae libertatis causa against the patron's possible claim to a for-feited contractual penalty (a poena promissa) in so far as such penaltyclauses were not ipso iure void by reason of being contra bonos mores.(This is a question that cannot be settled conclusively, owing to insuf-ficient source material.)

However, the patron could try to increase the service obligations tosuch an extent that insufficient time would remain, practically speaking,for the freedman to establish a competing business. The lawfulness ofsuch a claim to extensive services is discussed by the Republican juristAlfenus Varus, who was presumably a shoe manufacturer (or at leastthe son of one)-and of whom one might therefore expect a practicalapproach to economic relationships. The text, which was thought tocontain a "genuine restraint of competition," is beyond doubt the mostilluminating for our theme:'

Digest 38.1.26 (Alfenus Varus libro 7, digestorum): Medicus libertus, quodputaret, si liberti sui medicinam non facerent, multo plures imperantessibi habiturum, postulabat, ut sequerentur se neque opus facerent: id iusest nec ne? respondit ius esse, dummodo liberas operas ab eis exigeret,hoc est ut adquiescere eos meridiano tempore et valetudinis et honestatissuae rationem habere sineret.

§ 1. Item rogavi, si has operas liberti dare nollent, quanti oporteretaestimari. respondit, quantum ex illorum operis fructus, non quantumex incommodo dando illis, si prohiberet eos medicinam facere, commodipatronus consecuturus esset.

A freedman who was a doctor thought that if his own freedmen werenot to practice medicine, he would have far more patients. Therefore,he demanded that they accompanied him, but that they do not performany: Is that a lawful demand? [Alfenus Varus] replied that it is, providedthat he required nonservile services from them, that is, so as to let themrest at noon and pay attention to their health and reputation.

§ 1. Likewise, I asked: If freedmen were unwilling to provide theseservices, how should their value be estimated? He gave it as his opinion

14. Compare recently W. Waldstein, Operae libertorum (Stuttgart, 1986), 308ff.

14 Law and History Review

that they should be assessed in accordance with the profit from theirservices, not from the advantage the patron would obtain as a result ofthe inconvenience afforded them if he were to prevent them from prac-ticing medicine.

Here, a doctor hoped for a larger number of patients, if his freedmendid not themselves practice the medical profession. For this reason, hemade them promise not to start their own practices, but instead, toassist him with medical work during his consulting hours and his visitsto patients, by rendering advice and by assisting with treatment. Justas modem directors of clinics like to be accompanied during their wardrounds by a horde of assisting doctors, the better-known doctors of oldwere already in the habit of surrounding themselves with a followingof pupils and advisors to emphasize their importance and to raise theirstanding in the public eye. The satirist Martial makes fun of this practicein an epigram (5.9): A patient, who merely felt slightly faint and tired,has his forehead felt by one hundred pupils' hands-all as cold as thenorth wind-to establish whether he had a fever; so that he duly con-tracted a fever as a result. ("Centum me tetigere manus discipulorumaquilone gelatae: non habui febrem- nunc habeo.") Even Pliny reportsof laments that patients die under the onslaught of swarms of doctors,who all persist in offering their services (turba se medicorum perisse;nat. hist. 29.11). Besides the unreasonable fees claimed by some doctors(which were not then limited by tariff restrictions), Pliny mentions theirgreed, untempered by any touch of decency when they are faced witha mortally ill patient, but restrained solely by the prospect of competitionby fellow practitioners: "neque enim pudor, sed aemuli pretia (medi-corum) summittunt." This makes it clear how important the preclusionof fee undercutting by competitors must have been to the well-knowndoctors of old.

The significant query: id ius est nec ne? in the text (principium) revealsthe understandable doubts about the validity of such a clause. Did itrestrict freedom in an intolerable manner, with the result that an exceptioonerandae libertatis causa could be granted as relief? Alfenus recognizedthe predominant position of the patron, but at the same time did notfail to appreciate the possible unfairness to the freedmen. Their basicobligations were limited by the jurist, in so far as they had to performliberae operae only. The patron had to grant them the necessary lunchbreak and also had to consider their health and self-esteem. The siestatime that they were to be allowed, including time for bodily care,certainly also encompassed the customary visit to the thermal baths.The consideration of these human needs and of their honestas, does

Freedom of Contract

not, however, constitute an exhaustive description of the nature of freework (liberae operae). For in the case of slaves, too, the master couldnot demand anything indecent or immoral of them. Furthermore, ac-cording to other texts, the patron had to avoid endangering the healthof his liberti; sufficient time for bodily care and for earning a reasonablelivelihood had to be allowed them in accordance with established legalopinion, insofar as the patron did not wish to support them himself.(For our purposes, such a duty of maintenance must be accepted, eventhough it is not mentioned in the text.) The clause hoc est does notcontain a complete definition, but may be approximately translated as:"This means particularly.. .

The concept liberae operae appears only in this legal source; it isquestionable whether it was equivalent to the Pandectist operae liberales.In some medieval editions, the text is changed to liberales operas.Current scholarship contests whether people of antiquity counted med-icine among the artes liberales (liberal arts), which were philosophy,grammar, rhetoric, surveying, as well as the higher legal activities. Incontrast with these arts, medical treatment could be the object of aremunerated service contract (locatio conductio); it could moreover bepracticed by slaves. 5 Liberae operae in our text means that the patroncould no longer demand servile work from his freedman, but only suchtasks as were worthy of a free person. Doctors of standing and reputationlimited themselves generally to diagnosis and prescription of treatment.They left the practical implementation of treatment, the actual admin-istering of medical care and, in part, the preparation of medicine aswell, to their assistants or to independent medics. This was the reasonfor the inferior status of the surgeon who wielded the scalpel manually.One can therefore understand Alfenus's emphasizing that the patronwas not allowed to involve his freedman in completely menial or dirty,subservient jobs (for instance the cleaning of drains), which had nothingto do with medicine and which were usually performed by slaves.

The number of actual working days that the patron made the freed-man promise to serve him in our case, either by way of oath or stipulatio,is often debated in modern text interpretations. But this is perhapssuperfluous: it is quite possible that even toward the end of the Republic,the work could be fixed as far as manner and quantity were concernedin the discretion of the patron (especially if the responsum in questionemanates, as is sometimes accepted, from the teacher of Alfenus, namely

15. W. Waldstein, Operae libertorum, 300ff., 303-8; in favor of medicine as arsliberales: E Kudlien, Die Stellung des Arztes in der romischen Gesellschafi (Wiesbaden,1986), 92ff., 152ff.

16 Law and History Review

Servius Sulpicius Rufus). Even the high Classical jurist Celsus approves(in Digest 38.1.30 pr.) of an oath that is directed to quot operas patronusarbitratus sit, that means "as many services as his patron has judgedfit." In the exercise of his discretion the patron had to take into con-sideration what was fair and proper and not demand anything excessive:aequum et recte, non immodice arbitrare.

Considering the early time of the writing, the next paragraph (§7) ofAlfenus's text draws a remarkably subtle and precise distinction for thepurpose of calculating the damage payable, should a libertus not meetthe demands of his patron. Three possible bases of calculation arise forconsideration: first, the profit from the independent medical practiceof the freedman, which was earned contrary to the agreement, but suchacquisition of the profit is totally unacceptable and is not even men-tioned; second, the damages that the patron suffers due to the com-petitive activity of the freedman to whose practice patients from thepatron's existing practice have moved by reason of, for example, thecharging of lesser fees, but this second manner of calculation is alsorightly rejected by the jurist, as the patron cannot be guaranteed a fixedclientele for all time. The third possibility is the only applicable basisof calulation -namely the non-fulfilment of the freedman's duties, theextra takings that would have accrued to the patron (or the costs ofhiring a possible substitute); in other words, the fructus, had there beenproper performance of the freedman's duties.

The restraint on competition was therefore not enforceable, in asignificant sense, as far as the exacting of damages was concerned. 6 Itwas only enforceable indirectly, by way of the actionable duty to com-pensate for work not performed. The patron's interest in the limitationof competition extending beyond this limit remained legally unpro-tected. This fitted into the scheme of things: The competition prohibitionneque opus facerent, remained, as such, as unenforceable as the un-derlying profit motive (quod putaret... ). The patron could not insistupon the negative side of the agreement, namely the abstention fromcompetition. He could only rely on the bargain in a positive way, namelythat the liberti work for him and with him in an efficient and properway. The legal penalty attached only to the nonperformance of theobligation to render services and not to the duty to abstain from com-petition (which was actually the doctor's main concern). This instanceaccordingly contains no genuine prohibition of competition. The opin-ion formed by the jurist is merely the result of the peculiar duty of

16. Rightly: A. Watson, The Law of Persons in the Later Roman Republic (1967),230f.

Freedom of Contract

service laid down in Roman law in respect of freedmen. It cannot beseen as a parallel of the modem phenomenon of restraint of trade.

VII

Our final, frequently debated text concerns an issue that is also prob-lematic in modern law, namely to what extent a restraint of trade maybe couched in the form of a servitude. In Germany, today, this arisesmostly in the context of filling-station servitudes, by which large petrolcompanies restrain the leaseholders of filling stations by means of titledeed entries (servitudes) from selling fuel and lubricants of competitivebrands. Similarly, breweries protect themselves, when entering into beersupply agreements with pubs, by restraints against the acquisition ofdrinks from other suppliers. In contrast with restraints of trade forformer employees which are limited in time (two years at the longest,in Germany), these restraints, which are rooted in the law of things,are of unlimited duration and binding on every successor in title, byreason of their servitudinal character; as a result, the laws of restrictionsand enforcement ("Zwangs- und Bannrechte") abolished in 1869 bythe Reichsgewerbeordnung, continue to exist in another form.

Our case from Roman law concerns a property near the sea (thefundus Botrianus), encumbered at transfer to the advantage of anotherproperty situated on the shore (the fundus Geronianus). The latter prop-erty was encumbered to the effect that no tunny fishing could be un-dertaken from the subservient property (which form of fishing was wellknown to be a particularly important part of the fishing industry ofold).

Digest 8.4.13 pr. (Ulpianus libro 6, opinionum): Venditor fundi Geronianifundo Botriano, quern retinebat, legem dederat, ne contra eum piscatiothynnaria exerceatur. quamvis mari, quod natura omnibus patet, servitusimponi privata lege non potest, quia tamen bona fides contractus legemservari venditionis exposcit, personae possidentium aut in ius eorumsuccedentium per stipulationis vel venditionis legem obligantur.

The seller of the Geronian estate made it a term of the contract of salein favour of the Botrian estate, which he retained, that no tunny fishingshould be carried on off the latter. Now a servitude cannot be imposedby private agreement on the sea, as by nature it is open to all. However,because the good faith of the contract demands that the terms of a salebe honored, those persons who are in possession or those who succeedto their legal position are bound by the terms of the stipulation or thesale.

Law and History Review

The reply of the jurist was firstly that a private servitude could notoperate in respect of the sea, which was a res extra commercium. Withthis obvious answer he introduced his reply, presumably to the queryof the seller (or of his successor in title, who is expressly mentioned),who tried to evade the cumbersome obligation by seeking to rely onthe supposed legal impossibility of the restraint. Of course no one couldbe prevented from fishing on the open sea- "quia mare communeomnium est sicuti litora et aer, saepissime rescriptum est non possequem piscari prohiberi." (Ulpian in Digest 47.10.13.7.) A prohibitionof the public usage of the sea would constitute a personal iniuria ac-tionable by means of the actio iniuriarum (Ulp. cit.; Digest 43.8.2.9).Nevertheless, freedom of contract allows one to waive a public right infavor of a private (pacta sunt servanda). The term embodying the re-striction relates to the subservient property on the shore (and not tothe sea). The owners of the subservient property and their successorsin title were therefore bound by their bona fide contractual obligationsto honor the undertaking not to fish from the property. The fact thatthe successors in title were also bound by the lex stipulationis vel ven-ditionis poses a material problem for the interpreter, which cannot,however, be discussed fully here. We have to presuppose provincialproperty (compare the expression personae possidentium), to whichservitudes could be attached by mere private agreement.

The fact that a restraint of trade clause is allowed in this case doesnot amount to a departure from the jurist's resistance to restraintsmanifested in the abovementioned texts; the restraint was limited in itsarea of application to a specific property. In contrast with the patron-freedman relationship, we are not concerned here with the protectionof socially dependent persons. In this case, the two parties to the sale,who were equally strong economically, could negotiate the terms of thecontract and the price freely. In our example, the seller may havealienated the fishing business that was conducted from the fundus Ger-onianus (the land sold), and may then have retired on the neighboringfundus Botrianus (which would be similar to the transaction wherebyelderly people today transfer part of their estate and retire on the re-mainder). In modern German law, the seller of a business of such natureis also, even ipso iure (without an express term), subject to a restraintof trade. In the circumstances of our example, the benefit accruing tothe neighboring dominant property was apparent, with the result thatthe prerequisites for a servitude, namely vicinitas and utilitas, were met.This advantage (which had monetary value) could be taken into accountin the eventual price. The restraint agreement therefore encumbered

Freedom of Contract

the provincial land in terms of the law of things, in the same way asa pledge would, and therefore also bound individual successors in title.

VIII

By way of conclusion, I might offer the following summary: TheRoman jurists already recognized the conflict of interests that comesinto play in the case of restraint of trade clauses and discussed theconflict in the light of the relationship between patron and freedman.This instance occupies the middle ground between the modem restraintsof trade operable in the course of existing employment or companyand partnership relationships (where they operate ex lege), and thoserelating to the post-contractual period where an express term is stillrequired. For the freedman formed part of the followers (clientes) of apatron, and was also bound by an independent (and not only a post-contractual) duty of loyalty (the breach of which entailed penalties).The freedman often had to earn an independent living and moreoverowed the patron gratuitous services: the freedman was considerably lessfree, in other words, than modem employees who have left their em-ployment. The required services left the freedman, in practice, less timefor a competitive activity than a modern former employee, who hasno such obligations.

The necessary social protection of dependent persons was not ignoredby the Roman jurists. The patronage relationship by itself entailed nolegal prohibition against competitive economic activities. In terms ofcommercial law, a restraint of trade was only possible, according toDigest 38.1.26, in a single case, that is, where the service obligationsof the freedman was increased until no time remained for him to pursuehis own vocation. But in respect of such increased service obligations,the law again set social limits arising from the affected person's needfor rest periods, health care, and maintenance of self-esteem. As far asthe law of damages is concerned, such a covert (hidden) restraint oftrade clause entailed no penalty; only the failure to perform the dutyto work for the patron was actionable.

Where there was no social dependency and the contracting partiesfaced each other as equals (as in the case of the seller and buyer of theproperty in Digest 8.4.13 pr.), the Roman law was more favorablyinclined toward a restraint of trade clothed in the form of a servitude.Another factor in favor of such a restraint (in the sense of an obligationnot to do something) cast in a permanent servitudinal form, was thatit was worth quite a sum, which would be reflected in the calculationof the final contract price.