''Laesio enormis'' (Latin: ''abnormal harm'') is a

legal doctrine A legal doctrine is a framework, set of rules, procedural steps, or test, often established through precedent in the common law, through which judgments can be determined in a given legal case. A doctrine comes about when a judge makes a ruling ...

that gives a contracting party the ability to rescind an agreement if the price of exchange is less than a certain sum (for instance one half, or two thirds) of its actual value. The principle was developed as a way to ensure that people received a

just price The just price is a theory of ethics in economics that attempts to set standards of fairness in transactions. With intellectual roots in ancient Greek philosophy, it was advanced by Thomas Aquinas based on an argument against usury, which in his ti ...

(''iustum pretium'') in exchange, and in opposition to the Imperial Roman view, found in the ''

Corpus Juris Civilis The ''Corpus Juris'' (or ''Iuris'') ''Civilis'' ("Body of Civil Law") is the modern name for a collection of fundamental works in jurisprudence, issued from 529 to 534 by order of Justinian I, Byzantine Emperor. It is also sometimes referred ...

'', that the parties to an exchange were entitled to try to outwit one another.

Modern law

The

Louisiana Civil Code The ''Louisiana Civil Code'' (LCC) constitutes the core of private law in the State of Louisiana. The Louisiana Civil Code is based on a more diverse set of sources than the laws of the other 49 states of the United States: substantive law between ...

article 2589 permits rescission for

lesion A lesion is any damage or abnormal change in the tissue of an organism, usually caused by disease or trauma. ''Lesion'' is derived from the Latin "injury". Lesions may occur in plants as well as animals. Types There is no designated classif ...

beyond

moiety Moiety may refer to: Chemistry * Moiety (chemistry), a part or functional group of a molecule ** Moiety conservation, conservation of a subgroup in a chemical species Anthropology * Moiety (kinship), either of two groups into which a society is ...

. It states that the seller may rescind the sale of an immovable when the price, or the property it is exchanged for, is less than one half of the fair market value. Special rules apply to exchanges that have one party exchanging

immovable property In English common law, real property, real estate, immovable property or, solely in the US and Canada, realty, is land which is the property of some person and all structures (also called improvements or fixtures) integrated with or affixe ...

for a mixture of immovable or movable property, and cash—the party exchanging the mixture of property has the right to rescind the exchange, not the party exchanging the immovable. The

Austrian Civil Code Austrian may refer to: * Austrians, someone from Austria or of Austrian descent ** Someone who is considered an Austrian citizen, see Austrian nationality law * Austrian German dialect * Something associated with the country Austria, for example: ...

§934 also allows the contracting party to rescind for lesion beyond moiety (''Verkürzung über die Hälfte'') if the rescinding party receives less than half of the fair value of the consideration. The other party may avert rescission by agreeing to pay the difference to full value. This form of ''laesio enormis'' has been criticized from a legal and economics perspective for its inefficient incentives. In many cases it is impossible to profit from gathering information because profits above the mentioned threshold are prohibited by the law. Grechenig, Kristoffel R.
"The Economics of the Rule of Laesio Enormis (Die laesio enormis als enorme Laesion der sozialen Wohlfahrt?)"
''Journal für Rechtspolitik'', No. 1, 2006.

Notes

References

*H Grotius, ''De Jure Belli ac Pacis'' (1964) ch XI, trans FW Kelsey *M Weber, ''Economy and Society'' (1978) 578, 583, 589 and 1198 *RH Tawney, ''Religion and the Rise of Capitalism'' (1922) 40–44, on Aquinas and just price *Dawson, 'Economic Duress and Fair Exchange in French and German Law' (1937) 11 Tulane Law Review 345, 365 *Holstein, 'Vices of Consent in the Law of Contracts' (1939) 13 Tulane Law Review 560, 569 *WJ Ashley, ''An Introduction to English Economic History and Theory'' (1920) 126, on just price *M Wolf, ''Rechtsgeschäftliche Entscheidungsfreiheit und vertraglicher Interessenausgleich'' (1971) *AT Mehren and J Gordley, ''The Civil Law System'' (1977) 926 *J Gordley, 'Equality in Exchange' (1981) 69 Calif LR 1387 Civil law (legal system) Contract law Real property law Louisiana law Legal rules with Latin names {{contract-law-stub

Modern law

See also

Notes

References