Book contents
- Frontmatter
- Contents
- Acknowledgements
- 1 Merchant guilds, efficiency and social capital
- 2 What was a merchant guild?
- 3 Local merchant guilds
- 4 Alien merchant guilds and companies
- 5 Merchant guilds and rulers
- 6 Commercial security
- 7 Contract enforcement
- 8 Principal-agent problems
- 9 Information
- 10 Price volatility
- 11 Institutions, social capital and economic development
- Bibliography
- Index
7 - Contract enforcement
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Acknowledgements
- 1 Merchant guilds, efficiency and social capital
- 2 What was a merchant guild?
- 3 Local merchant guilds
- 4 Alien merchant guilds and companies
- 5 Merchant guilds and rulers
- 6 Commercial security
- 7 Contract enforcement
- 8 Principal-agent problems
- 9 Information
- 10 Price volatility
- 11 Institutions, social capital and economic development
- Bibliography
- Index
Summary
One must take good account of the types of people one deals with, or to whom one entrusts one's goods, for no man is trustworthy with money.
(Advice to merchants by an anonymous Florentine, mid-fourteenth century)A good merchant does not show his talents by selling good products, which everyone can do, but precisely by succeeding in getting rid of merchandise of poor quality.
(Francesco Bartolomaei, Sienese merchant in Candia (Crete), to Pignol Zucchello, Pisan merchant in Venice, mid-fourteenth century)When we trade, we transfer property rights to another person. To do this, we make a contract. Unless it is a spot trade – i.e. good and payment are exchanged simultaneously – reneging is possible. The seller may take the payment and not give the good, or the buyer take the good and not pay. So contracts need to be enforced. If they are not, people will not trade, even though exchange could profit both them and the wider economy.
Contract-enforcement problems exist everywhere, but are particularly acute in trade across long distances or political frontiers. To solve them, merchants use institutions – formal and informal – to reduce the probability that their trading partners will renege on agreements.
- Type
- Chapter
- Information
- Institutions and European TradeMerchant Guilds, 1000–1800, pp. 250 - 314Publisher: Cambridge University PressPrint publication year: 2011
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