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 The House of Fugger () is a German family that was historically a prominent group of European bankers, members of the fifteenth- and sixteenth-century mercantile patrician (post-Roman Europe), patriciate of Augsburg, international mercantile ban ...

, as a method of circumventing the canon law prohibition of

usury Usury () is the practice of making loans that are seen as unfairly enriching the lender. The term may be used in a moral sense—condemning taking advantage of others' misfortunes—or in a legal sense, where an interest rate is charged in e ...

. Some Muslims are of the view that the present practice of

Islamic banking Islamic banking, Islamic finance ( ''masrifiyya 'islamia''), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economics. Some ...

relies on devices similar to the contractum trinius as a means of working around a ban of

riba ''Riba'' (, or , ) is an Arabic word used in Islamic law and roughly translated as " usury": unjust, exploitative gains made in trade or business. ''Riba'' is mentioned and condemned in several different verses in the Qur'an3:130

(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.

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. Thus, Thomas Cajetan,

Francisco de Vitoria Francisco de Vitoria ( – 12 August 1546; also known as Francisco de Victoria) was a Spanish Roman Catholic philosopher, theologian, and jurist of Renaissance Spain. He is the founder of the tradition in philosophy known as the School of Sala ...

, Domingo de Soto and criticized it in the name of the scrupulous application of the prohibition on usury. Following their opinions,

Pope Sixtus V Pope Sixtus V (; 13 December 1521 – 27 August 1590), born Felice Piergentile, was head of the Catholic Church and ruler of the Papal States from 24 April 1585 to his death, in August 1590. As a youth, he joined the Franciscan order, where h ...

condemned in 1586, in his bull ''Detetabilis avaritia'', the practice of commercial credits, illustrated in particular by the triple contract. Wolfgang Musculus, although a protestant theologian, had a nuanced opinion on the triple contract: although he could tolerate it, he nevertheless considered it morally reprehensible in that investors, too preoccupied with the love of money, no longer practiced

charity Charity may refer to: Common meanings * Charitable organization or charity, a non-profit organization whose primary objectives are philanthropy and social well-being of persons * Charity (practice), the practice of being benevolent, giving and sha ...

. He also asked the authorities of the

Holy Roman Empire The Holy Roman Empire, also known as the Holy Roman Empire of the German Nation after 1512, was a polity in Central and Western Europe, usually headed by the Holy Roman Emperor. It developed in the Early Middle Ages, and lasted for a millennium ...

to prohibit all usurious and illicit contracts. This position would later have a great influence on Lambert Daneau.

Defenses

As legal pillar of commercial capitalism, 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. If, as previously indicated, the first members of the

School of Salamanca The School of Salamanca () was an intellectual movement of 16th-century and 17th-century Iberian Scholasticism, Scholastic theology, theologians rooted in the intellectual and pedagogical work of Francisco de Vitoria. From the beginning of the ...

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 used and a rejection of the arguments of his predecessors, seeks to legitimize commercial practices and regrets a ban that, according to him, harms the interests of society. At the end of the 17th century, most Catholic moral theologians validated the practice of the triple contract. As the Protestant theologian

Gisbertus Voetius Gisbertus Voetius ( Latinized version of the Dutch name Gijsbert Voet ; 3 March 1589 – 1 November 1676) was a Dutch Calvinist theologian, pastor, and professor. Life He was born at Heusden, in the Dutch Republic, studied at Leiden, and in 16 ...

notes, many

papist The words Popery (adjective Popish) and Papism (adjective Papist, also used to refer to an individual) are mainly historical pejorative words in the English language for Roman Catholicism, once frequently used by Protestants and Eastern Orthodox ...

s such as Juan Azor or Johannes Malderus now defend this practice."Adhaec contractus assecurationis sortis, contractus societatis et lucri seu venditiones lucri incerti pro certo omnes liciti sunt in Papatu, et a conscientiae magistris ex communi sententia ibi defenduntur Maldero in 2.2., tract. 5, cap. 3, Azorio, tom. 3, lib. 7, c. 7.8.9. et lib. 9, c. 2.3.4. Si ergo simplices illi contractus liciti, quidni contractus usurae, qui ex illis mixtus et compositus est ?". Quoted from Ghisbertus Voetius, Selectae disputationes theologicae, Utrecht, 1667, vol. 4, p. 558

Sources

References

External links

An essay comparing Islamic banking practices to the contractum trinius
{{DEFAULTSORT:Contractum trinius Banking terms Credit Interest Canon law history