The Dual Origin of the Duty to Disclose in Roman Law

The Roman law remedies for failure to disclose in sales contracts were developed by two different institutions: that of the aediles, with jurisdiction on market transactions effected through auctions, and that of the praetor, with general jurisdiction including private transactions. The aedilician remedies—the actiones redhibitoria and quanti minoris—allowed for rapid transactions and inexpensive litigation but generated some allocative losses ex post, as they did not incentivize the parties to exchange information about idiosyncratic characteristics of the goods for sale. In contrast, the remedy developed by the praetor—the actio ex empto—implied lengthier transactions and more expensive litigation but eliminated the ex post allocative loss, as it fully protected the buyers’ idiosyncratic interests. The analysis reveals that these Roman law remedies maximized the value of the underlying contracts and sheds new light on how differences in the lawmaking institutions affect the law produced by them.