Incomplete Organizations: Legal Entities and Asset Partitioning in Roman Commerce

In this chapter we analyze ancient Rome?s law of business entities from the perspective of asset partitioning, by which we mean the delimiting of creditor collection rights based on the distinction between business assets and personal assets. Asset partitioning, which is an essential legal attribute of modern business forms such as the partnership and the business corporation, reduces borrowing costs by simplifying credit-risk assessment and expediting insolvency proceedings. We find that ancient Roman business arrangements, such as the societas (very loosely, ?partnership?) and the slave-run business endowed by the slaveowner with a peculium (a sum of capital), did not give business creditors the first claim to business assets, making these forms of organization non-entities according to the criterion of asset partitioning. It appears that the only true legal entity used to form profit-seeking firms was the societas publicanorum, which roughly resembled the
modern limited partnership. But use of that form was generally limited to firms providing services contracted out by the state. Moreover, the societas publicanorum was largely a creature of the Republic, and was largely abandoned during the Empire. Although Rome had a complex economy and sophisticated commercial law, and was familiar with most of the types of asset partitioning we see in modern legal systems, it ultimately failed to develop legal entities for general use in commerce. Apparent reasons include the Roman aristocracy?s disparagement of commerce, the emperors? wariness of strong organizations outside the state, and the society?s continuing reliance on the family -- a durable and complex legal entity in its own right ? to handle many of the needs of commerce.