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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.
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 borrower 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.[ citation needed ]
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 [1] . Thus, Thomas Cajetan [2] , Francisco de Vitoria, Domingo de Soto [3] and Franciscus Zypaeus criticized it in the name of the scrupulous application of the prohibition on usury [4] . 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 [5] .
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 [6] in that investors, too preoccupied with the love of money, no longer practiced charity [7] . He also asked the authorities of the Holy Roman Empire to prohibit all usurious and illicit contracts [8] . This position would later have a great influence on Lambert Daneau [9] .
As legal pillar of commercial capitalism [10] , 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 [1] .
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 used [11] and a rejection of the arguments of his predecessors [12] , seeks to legitimize commercial practices [13] and regrets a ban that, according to him, harms the interests of society [14] .
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 [15] .
In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. It is distinct from a fee which the borrower may pay to the lender or some third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit or reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs.
In finance, a loan is the transfer of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money.
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 time referred to the making of any rate of interest on loans. It gave rise to the contractual principle of laesio enormis.
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 excess of the maximum rate that is allowed by law. A loan may be considered usurious because of excessive or abusive interest rates or other factors defined by the laws of a state. Someone who practices usury can be called a usurer, but in modern colloquial English may be called a loan shark. In many historical societies including ancient Christian, Jewish, and Islamic societies, usury meant the charging of interest of any kind, and was considered wrong, or was made illegal. During the Sutra period in India there were laws prohibiting the highest castes from practicing usury. Similar condemnations are found in religious texts from Buddhism, Judaism, Christianity, and Islam. At times, many states from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful. Christian religious prohibitions on usury are predicated upon the belief that charging interest on a loan is a sin.
The School of Salamanca is an intellectual movement of 16th-century and 17th-century Iberian Scholastic theologians rooted in the intellectual and pedagogical work of Francisco de Vitoria. From the beginning of the 16th the traditional Catholic conception of man and of his relation to God and to the world had been assaulted by the rise of humanism, by the Protestant Reformation and by the new geographical discoveries and their consequences. These new problems were addressed by the School of Salamanca. The name is derived from the University of Salamanca, where de Vitoria and other members of the school were based.
Thomas Cajetan, OP, also known as Gaetanus, commonly Tommaso de Vio or Thomas de Vio, was an Italian philosopher, theologian, the Master of the Order of Preachers 1508 to 1518, and cardinal from 1517 until his death. He was a leading theologian of his day who is now best known as the spokesman for Catholic opposition to the teachings of Martin Luther and the Protestant Reformation while he was the Pope's legate in Augsburg, and among Catholics for his extensive commentary on the Summa Theologica of Thomas Aquinas.
Riba 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'an. It is also mentioned in many hadith.
Luis de Molina was a Spanish Jesuit jurist, economist and theologian.
Lombard banking refers to the business of Italian moneylenders generally referred to as "Lombards", even though many originated from Northern and Central Italian regions other than Lombardy. The term was often used in a derogatory sense, as Lombard banking was associated with the sin of usury.
A mount of piety is an institutional pawnbroker run as a charity in Europe from Renaissance times until today. Similar institutions were established in the colonies of Catholic countries; the Mexican Nacional Monte de Piedad is still in operation.
Lenaert Leys, better know as Leonardus Lessius ) was a Brabant jurist, theologian, economist from the Jesuit order.
Domingo de Soto, O.P. was a Spanish Dominican priest and Scholastic theologian born in Segovia (Spain), and died in Salamanca (Spain), at the age of 66. He is best known as one of the founders of international law and of the Spanish Thomistic philosophical and theological movement known as the School of Salamanca.
Vix pervenit is an encyclical, promulgated by Pope Benedict XIV on November 1, 1745, which condemned the practice of charging interest on loans as usury. Because the encyclical was addressed to the bishops of Italy, it is generally not considered ex cathedra. The Holy Office applied the encyclical to the whole of the Roman Catholic Church on July 29, 1836, during the reign of Pope Gregory XVI.
Martín de Azpilcueta, or Doctor Navarrus, was a Spanish canonist, theologian and economist.
Wolfgang Musculus was a Reformed theologian of the Reformation.
Diego de Covarrubias y Leyva was a Spanish jurist and Roman Catholic prelate who served as Archbishop of Cuenca (1577-1577), Archbishop of Segovia (1564-1577), Archbishop of Ciudad Rodrigo (1560-1564), and Archbishop of Santo Domingo (1556-1560).
A mohatra contract is way of loaning money with interest without breaking the letter of the usury laws. The lender sells the borrower a trivial object to be paid for on the loan due date. The borrower then sells the same object back immediately for cash at the price minus the interest. An example would be a lender selling a pencil for $120 to be paid in a year's time and immediately repurchasing it for $100 in cash. The borrower has effectively borrowed $100 at a 20% interest rate.
Christian finance is a kind of ethical finance following Christian ethics. Although not widely used, the notion of "Christian finance" or "Catholic finance" refers to banking and financial activities which came into existence several centuries ago. Whether the activities of the Knights Templar, Mounts of Piety or the Apostolic Chamber attached directly to the Vatican, a number of operations of a banking nature or a financial nature were practiced, despite the prohibition of usury and the Church distrust against exchange activities. Christian finance is characterized by the existence of three dimensions: personal (actors), operational (operations), and dogmatic (principles).
Zinskauf was a financial instrument, similar to an annuity, that rose to prominence in the Middle Ages. The decline of the Byzantine Empire led to a growth of capital in Europe, so the Catholic Church tolerated zinskauf as a way to avoid prohibitions on usury. Since zinskauf was an exchange of a fixed amount of money for annual income it was considered a sale rather than a loan. Martin Luther made zinskauf a subject of his Treatise on Usury and his Sermon on Trade and Usury and criticized clerics of the Catholic Church for violating the spirit if not the letter of usury laws.
Ijarah,, is a term of fiqh and product in Islamic banking and finance. In traditional fiqh, it means a contract for the hiring of persons or renting/leasing of the services or the “usufruct” of a property, generally for a fixed period and price. In hiring, the employer is called musta’jir, while the employee is called ajir. Ijarah need not lead to purchase. In conventional leasing an "operating lease" does not end in a change of ownership, nor does the type of ijarah known as al-ijarah (tashghiliyah).