The Payment Order of Antiquity and the Middle Ages: A Legal History

by Benjamin Geva, Craig Martin Scott (Editor)

Overview

Examining the legal history of the order to pay money initiating a funds transfer, the author tracks basic principles of modern law to those that governed the payment order of Antiquity and the Middle Ages. Exploring the legal nature of the payment order and its underpinning in light of contemporary institutions and payment mechanisms, the book traces the evolution of money, payment mechanisms and the law that governs them, from developments in Ancient Mesopotamia, Ancient Greece, Rome, and Greco-Roman Egypt, through medieval Europe and post-medieval England. Doctrine is examined in Jewish, Islamic, Roman, common and civil laws.

Investigating such diverse legal systems and doctrines at the intersection of laws governing bank deposits, obligations, the assignment of debts, and negotiable instruments, the author identifies the common denominator for the evolving legal principles and speculates on possible reciprocity. At the same time he challenges the idea of 'law merchant' as a mercantile creation.

The book provides an account of the evolution of payment law as a distinct cohesive body of legal doctrine applicable to funds transfers. It shows how principles of law developed in tandem with the evolution of banking and in response to changing circumstances and proposes a redefinition of 'law merchant'.

The author points to deposit banking and emerging technologies as embodying a great potential for future non-cash payment system growth. However, he recommends caution in predicting both the future of deposit banking and the overall impact of technology. At the same time he expresses confidence in the durability of legal doctrine to continue to evolve and accommodate future payment system developments.

Product Details

ISBN-13:	9781849460521
Publisher:	Bloomsbury Academic
Publication date:	11/01/2011
Series:	Hart Monographs in Transnational and International Law , #6
Pages:	784
Product dimensions:	6.60(w) x 9.30(h) x 1.70(d)

About the Author

Benjamin Geva, LL B Heb Univ, Jerusalem. LLM, SJD, Harvard, is Professor of Law, Osgoode Hall Law School of York University, Canada.

Table of Contents

Preface vii

List of Illustrations xix

Table of Cases xxi

Table of Legislation xxxi

International and Miscellaneous Legislation xlv

Prologue 1

1 The Theme 1

2 The Context 2

3 Description 6

4 Contribution to Scholarship 10

1 Money, Payment in Money, and the Order to Pay Money 15

1 Introduction 16

2 Money 17

3 Payment in Money 25

3.1 The Meaning of 'Payment' 25

3.2 Tender of Money 26

3.3 The Process of Payment: Completion, Risk and Remedies 32

4 The Order to Pay Money: The Concept of a Payment Mechanism 37

4.1 Transmission of Monetary Value: General Framework 37

(i) The Basic Model 37

(ii) The Three-party Payment Mechanism 39

(iii) Multipartite-payment Mechanisms 45

4.2 Transmission of Monetary Value: Legal Issues 47

(i) Introductory Notes 47

(ii) Three-party Payment Mechanism 47

The Issues 47

First and Second Issues: Paymasters Duties towards Debtor and Creditor 49

Second Issue: Scope of Creditor's Entitlement 52

Third Issue: Debtor's Discharge 54

Fourth Issue: Paymaster's Discharge 55

Discharge: Summary 56

(iii) Four-party Money-transmitter Payment Mechanisms 56

(iv) Four-party Banker Payment Mechanisms 58

4.3 Conclusion 60

4.4 Addendum: Payment by Paymaster's Obligation and the Evolution of Modern Payment Mechanisms 61

2 Money and Monetary Legal Theory in Antiquity and the Middle Ages 68

1 Money in Antiquity and the Middle Ages 68

1.1 Overview 68

1.2 Origins 73

1.3 Expansion 81

1.4 Debasement and Transformation 87

2 The Monetary Legal Theory under the Talmud 92

2.1 Introduction 92

2.2 Coins as Money and Ordinary Chattels: The Legal Nature of the Money Change Transaction 97

2.3 Coins Valued on Basis of Metal: Effect of Erosion 101

(i) Introduction 101

(ii) Deficient Coins as Money 103

(iii) Erosion to the Limit of Fraud 103

(iv) Erosion Beyond the Limit of Fraud 105

2.4 Property Rules Applicable to Coins: Facilitating Circulation 107

2.5 Conclusion 110

3 From Metallism to Nominalism: Evolution of Monetary Legal Theory in Roman Law and the Common Law of England 111

4 Concluding Remarks 115

3 Funds Transfers in Antiquity: Instruments, Institutions and Mechanisms 116

1 Introduction 116

2 Ancient Mesopotamia 118

3 Ancient Greece 124

4 Ancient Rome 132

5 Greco-Roman Egypt 140

6 Summary 155

4 Deriving History from Law: Are Cheques Traceable to the Talmud? 158

1 Introduction 158

2 Directing a Creditor to a Paymaster: The Bava Metzia Text 161

2.1 The Talmudic Text in Bava Metzia: Credit Extended by Paymaster 161

2.2 Tosafot's Commentary - Renunciation of Recourse 165

2.3 Other Commentators - Elaborating Tosafot's Discussion 172

2.4 Which Scenario? - Aspects of Tosafot's Analysis Revisited 176

2.5 Talmudic Text in Shevuot - Tosafot's Position Supported 178

3 Final Modern Lawyer's Observations 184

Appendix: Glossary of Post-Talmudic Jewish Law Sources 186

5 The Payment Order under Roman Law 191

1 The Order to Pay and Compliance: An Overview 191

2 The Debt Owed by Paymaster to Debtor 194

3 The Legal Nature of the Delegation Order 201

4 Executing the Delegation: Introduction 208

5 Imperfect Execution: Receptum and Constitutum 210

6 Perfect Execution of the Delegation: Novation by Stipulation 214

6.1 Enforceability by Creditor of Paymaster's Undertaking 214

6.2 Scope and Impact of Paymaster's Undertaking 217

7 Perfect Execution of the Delegation: Novation Other than by Stipulation 223

7.1 Litis Contestatio 223

7.2 Acknowledgment of an Entry Posted to 'Codex Accepti et Expensi' 225

8 All Cards Shuffled: Delegation under the Reform Projects of Justinian 229

9 Cession: An Alternative to Delegation 233

10 Roman Law and Practice: Multipartite Applications of the Mechanisms 241

10.1 Introduction 241

10.2 Circulation of Credit 242

10.3 Payment to a Distant Party 244

11 Final Observations: The Uncertain Heritage of Roman Law 246

6 The Medieval Hawale: The Legal Nature of the Suftaj and Other Islamic Payment Instruments 252

1 Introduction: Banking and Payment Institutions in the Medieval Islamic World 252

2 Transfer of Debt under Islamic Law: The Hawale 257

2.1 The Mandate for Collection and the Hawale Concept 257

2.2 The Hawale in Legal Doctrine 259

1 Who are the parties to the hawale agreement? 261

2 Is the transferee (paymaster) to be indebted to the transferor (original debtor)? 262

3 Is recourse available to the creditor against the transferor (original debtor)? 263

4 "What are the transferee (paymaster)'s defences? 265

5 "What securities are available to the creditor? 266

2.3 Codification of Hanafi Law: The Hawale under the Mejelle 268

3 The Suftaj and Other Islamic Payment Instruments: The Hawale Applied 277

3.1 Islamic Payment Instruments and the Hawale: An Overview 277

3.2 The Suftaj under Hawale Principles 284

3.3 The Legal Nature and Operation of the Suftaj 290

3.4 The Objections to the Suftaj 299

4 Conclusion: Hawale, Suftaj and the Bill of Exchange 301

7 Funds Transfers under TalmudicLaw: Orthodoxy and Adaptation 307

1 Introduction 307

2 Transfer of Ownership in Money Owed 309

2.1 Money Owed on Loan or Deposit 309

2.2 Direct Mechanisms for the Transfer of Money Owed 312

2.3 Transfer of Money Owed by Authorizing the Creditor to Collect from the Paymaster: The Urcheta 321

2.4 Transfer of Money Owed by Turning the Creditor's Agent to a Paymaster: The Dyokani 326

2.5 Summary 329

3 Instructing a Paymaster to Pay the Creditor Money Owed by Means of a Presence-of-all-three Declaration 330

4 Remitting Coins to a Distant Place: The Dyokani Transformed 342

5 Conclusion: The Talmudic Contribution 350

8 Payment Orders in Medieval Continental Europe: Book Transfers and Bills of Exchange 352

1 Introduction: Bankers, Banking and Payments in Medieval Continental Europe 352

2 Deposit and Transfer Banking in Medieval Continental Europe 357

3 Heralding the Bill of Exchange: The Medieval Continental Bill of Payment 369

4 The Bill of Payment: Legal Relationships 387

5 Negotiability Acquired: The Continental Bill of Exchange in the Early Post-Medieval Era 401

6 Conclusion: Medieval Continental Contribution Assessed 418

9 Payment Orders under English Common Law: The Bailment of Money and the 'Reception' of the Bill of Exchange 423

1 Introduction 423

2 Bailment of Money and the Bailor-Bailee Relationship 425

3 The Beneficiary's Right to Bailed Funds 433

4 The 'Reception' of the Bill of Exchange - Payee's Remedy 442

5 The Bailment of Money and the Bill of Exchange as Payment Mechanisms: A Comparison 453

6 Conclusion 464

10 Evolution and Transformation: The Birth of the Modern Payment System in Post-Medieval England 467

1 Introduction 467

2 The Goldsmiths' System: Banknotes, Cheques, and Banking Network 469

2.1 Introduction 469

2.2 Goldsmith Banking Operations: Notes, Cheques and Bill Discounting 471

2.3 Goldsmith Banking System: The Network 481

3 Bank of England: Note Issue, Cheque Settlement and Central Banking 484

3.1 Introduction 484

3.2 Bank of England Notes 487

3.3 Bank of England Becomes a Settlement Bank 492

3.4 Bank of England Becomes a Central Bank 497

4 Paper Money and the Promise to Pay Money: Are Banknotes 'Promissory Notes'? 505

5 Gold Reduced to Paper and Entries to Accounts: Metallism, Nominalism, Paper Money and Bank Money 518

11 Turning the Wheels of Post-Medieval Change: Paper Circulation and Negotiability under English Law 528

1 Introduction 528

2 Negotiation of Bills Payable to Order 531

3 Negotiation of Notes Payable to Order 533

4 Negotiation of Instruments Payable to the Bearer 541

5 Negotiation of Cheques 547

6 Negotiation and Material Negotiability: Circulation Free from Claims and Defences 552

6.1 Introduction 552

6.2 Freedom from Adverse Claims 554

6.3 Freedom from Contract Defences 568

7 Conclusion: Final Reflections on 'Negotiation' and 'Negotiability' 582

12 Staying on Course: The Footprint of Ancient and Medieval Doctrine and Practice on Modern Payment Laws 585

1 Introduction 585

2 Payment Services and their Providers 587

3 The Bank Deposit 596

4 The Payment Order and its Execution under Modern Law 604

5 The Payment Order as a Mandate 612

6 Paymaster's Obligation: Autonomy and Discharge 622

7 Conclusion: A 'Revisionist' View on a 'Decentralized' Non-customary 'Law Merchant' 637

Epilogue: From Barter to Electronic Funds Transfers and the Role of Law 640

Illustrations 642

Bibliography 687

Index 713

Editorial Reviews

...by publishing The Payment Order of Antiquity and the Middle Ages: A History, Professor Geva amply demonstrates the depth and breadth of his learning in this area as the foundation for his scholarship on current and likely future issues in payments law. All banking lawyers should be delighted that he has produced this volume, so that they, too, may benefit from his lifelong devotion to the study of that law.

This book is both lengthy and very detailed, as well as being very closely argued throughout and no review can do justice to the scholarly riches found therein.

...a very fine work of immense learning and scholarship. It is well-written, well-organized, and once chapter one has been consumed, intelligible to the interested non-expert reader. The historical matter is presented in meticulous and logical detail, a testimony to a very precise and logical mind. I learned an enormous amount from reading the book, expect to returban to it frequently, and commend it heartily to readers.” —Banking and Finance Law Review, Volume 28

“The Payment Order of Antiquity and the Middle Ages details the development of non-cash payments over the time period indicated by the title…If the book did no more than that, it would be a fascinating read, but Professor Geva undertakes a more ambitious goal. He wishes to show that the current law of payment systems has developed as a progression of payment system laws – each later system, knowingly or unknowingly building on an earlier one.” —Jourbanal of Banking and Finance Law and Practice 23

“In every way this is a big book. It is lengthy (more than 700 pages), its coverage is vast and it advances some very important ideas about the transmission, rebirth and adaptation of legal ideas and institutions across time and cultures. While the focus is payment, the implications of the analysis exited well beyond that into other areas of legal and commercial history. The students of legal transplants would benefit from the banking story it tells. It is a work of mature and impressive scholarship. For years to come, the book will be used as a launching pad for further analysis. No other person could have brought it off; it is in every sense a tour de force.” —Canadian Business Law Jourbanal, Volume 53

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