Interoffice Memorandum of Law

For : Dean Pacifico A. Agabin

Re : Enforceability of a Contract with a Void Penal Stipulation

Validity of Application of Laws of Venice on Forfeiture of Properties of a

Jew Convicted of Attempted Murder of a Christian

From : Judy Ann Sheng

Case : People of Venice vs Shylock

Date : 13 May 2017

Statement of the Assignment

The writer was tasked to write a memorandum on whether or not the contract

executed between Shylock and Antonio may be enforced in its entirety, particularly

the penal clause stipulation which provided that should the bond be forfeited by the

debtor Antonio, the penalty to be exacted by the creditor Shylock would be one

pound of flesh of the former, to be taken from whatever part of the formers body the

latter should please.

If the first issue should be settled in the negative, the writers task is expanded to

further analyze what remedies or alternative courses of action as penalty for

forfeiture are available to creditor Shylock.

Page 1 of 13
Lastly, the writer is tasked to write a memorandum on the validity of the

applicability of the Venetian law with regards to its provision on forfeiting the

properties of a Jew who should shed a drop of Christian blood or even attempt to do

so.

The instructions given in the writing of this memorandum directs that it be written

in a manner so as to refute the arguments of Portia on the first and second issues as

previously stated. Furthermore, the writer was granted permission to analyze the

case and its pertinent issues in the context of Philippine laws as of current.

Facts

Bassanio, a Venetian gentleman, intends to court Portia, the heiress of Belmont.

However, as his funds were then insufficient to finance his purpose, he approached

Antonio, a merchant of Venice and an intimate friend of his. Bassanio informs

Antonio of his predicament. In his desire to be of assistance to Bassanio, Antonio

consented to furnishing Bassanio the amount that he needs to execute his designs in

wooing Portia. However, Antonios assets were all tied at the time to his ships

carrying his merchandise which had by then set sail for various trading ports, one

bound to Tripolis, the other to the Indies and the last two to Mexico and England, he

had, at that moment, no readily available funds to finance Bassanio.

In order to make good on his promise to financially aid Bassanio, Antonio, then

obtains a bond from Shylock in the amount of three thousand ducats subject to an

Page 2 of 13
agreement between the parties that the same must be paid within a period of three

months. Instead of an interest as penalty for forfeiture, the parties mutually

consented to putting in its place a stipulation that should the bond be forfeited,

Shylock may exact from Antonio, one pound of the latters flesh from whatever part

of the latters body the former may choose with statements from both parties stating

this is for a merry sport. This contract was then subsequently notarized.

Bassanio was then able to successfully court Portia. By virtue of his marriage to

Portia, he had then consequently assumed ownership of the entirety of her

properties. It was sometime after his marriage that a note was received by him

stipulating that the Antonio had forfeited his bond. The reason for the forfeiture was

attributed to the wreckage of his ships at sea which left him nothing but losses to

secure his bond to Shylock. In view of the lapse of the three month period allotted

for the repayment of the bond, Shylock had proceeded to file an action in court to

demand enforcement of the penalty for forfeiture.

Bassanio, with consent from his wife, then made haste carrying the principal

amount of three thousand ducats doubled to six thousand in an attempt to deface

the bond. Upon offering the doubled amount to Shylock, the same was refused by

him in favor of enforcing the extraction of the one pound of flesh from that part of

Antonios body nearest his heart.

Page 3 of 13
Antonio does not refute such claim and even states that he should have judgement

and the Jew his will.

Portia, disguising herself as a doctor of law under the person of Balthazar, appeared

subsequently as an amicus curiae. In assailing the enforceability of the penal clause

of the contract, she argued that since justice is what is demanded, rightly so should it

be served. She argued that for such justice to be served, the penalty demanded must

be exacted as it was written and executed in the notarized bond. However, such bond

stipulated that it is one pound of flesh and flesh alone that may be demanded in case

of forfeiture. The bond had not any further stipulation that the creditor may demand

even a drop of blood in excess of the one pound stipulated. Therefore, Shylock

himself is bound by that contract to stick fully to its provisions because should he

violate the same by extracting more than that which he is entitled to, he forfeits his

life and his property.

Shylock thereafter chose to forego his demands for execution of the penalty clause of

the contract, resigning himself to specific performance of the bond with damages in

the form of interest, that is, the payment of the bond in the amount of six thousand

ducats. Portia, however, denies this request as she argues that he had already

forfeited his right to the same as he had previously rejected such offer.

Furthermore, Portia argues that his actions demanding the enforcement of the

forfeiture of the bond speaks of his intention to shed Christian blood and is in itself

Page 4 of 13
sufficient evidence of his attempt on the life of a Christian, which under Venetian

laws is punishable by death and his properties forfeited, one half in favor of the

party that should be offended by his act, in this case Antonio and the other half by

the State.

The judge pardons his act of attempted murder upon the person of Antonio, a

Christian by decreeing that he should not be punished by death but his properties

shall be forfeited accordingly.

Antonio waives his right to the one half of Shylocks property on the condition that

first he bequeaths all his remaining property to the latters daughter and the man

that said daughter should marry upon the latters death and that he should convert

to Christianity. Shylock, defeated, accepted such conditions.

Issues

(1) WHETHER OR NOT action for forfeiture of bond by Shylock is enforceable

(2) WHETHER OR NOT, by virtue of denial of action to execute forfeiture of bond,

Shylock has right to specific performance with damages

(3) WHETHER OR NOT the applicability of the provisions of laws of Venice concerning

the forfeiture of the properties of a Jew convicted of attempted murder upon the

person of a Christian is valid

Short Answer

Page 5 of 13
Issue 1

No. The stipulation in the contract which acts as a penal clause is illegal thus this

portion of the contract should be struck down for being void.

Issue 2

Yes. Only the penal clause stipulation is void, the principal obligation is valid and

therefore still stands and is valid ground for action for damages and enforcement.

Issue 3

No. The penalty of forfeiture of all his properties should he be convicted of

attempted murder upon the person of a Christian is excessive.

Analysis

(1) WHETHER OR NOT action for forfeiture of bond by Shylock is enforceable

In settling this issue, it is first essential to analyze the nature of the transaction

between Shylock and Antonio in order to determine the enforceability of its

provisions and what laws would necessarily apply to settle the issue.

It appears that the transaction is a contract of loan with a penal clause subject to a

period. It is subject to a period by virtue of the provision that the principal is payable

within three months and non-payment after lapse of such period forfeits the bond

and gives rise to penalty, invoking Article 1193, defining obligations with a period as

those which for whose fulfillment a day certain has been fixed and Article 1126,

Page 6 of 13
defining obligations with a penal clause as having clause providing for a penalty

which is to substitute indemnity for damages and aptly shown in this case, the

payment of interest in case of non-compliance. This is in view of the fact that the

normal practice in loan, in referring to the Venetian context is to place interest upon

the principal amount should the latter not be paid upon demand or upon lapse of

the period allotted for payment.

The creditor is Shylock who agreed to loan the amount of three thousand ducats to

the debtor, Antonio who agreed to pay the same within a period of three months and

that in default of payment of the principal, instead of the imposition of a usurious

interest upon the bond, the penalty should be one pound of flesh demandable by the

creditor from the debtor from any part of the latters body the former may choose.

The object is the loan and the tie is the contract. Thus, we find that the essential

requisites to give rise to an obligation, the subject, object and juridical tie are

present.

In every valid contract, the essential requisites of consent, object and cause must be

manifested. The consent is inferred from the signing of the bond and of notarizing

the same, what more, Antonio and Shylock had met personally to negotiate the

terms of the transaction. Antonio then had every opportunity to refuse to be bound

by the penal clause stipulation or to bind himself to some other creditor with terms

more favorable to him. Thus, Antonios consent to the provisions of the contract, and

that of Shylocks is inferred. The consent of both parties do not have any defect, in

Page 7 of 13
that both are of legal age and not subject to any legal impediment that may bar them

from giving such consent, in satisfaction of the requirements of Article 1327 of the

New Civil Code providing that minors and insane or demented persons and deaf-

mutes who do not know how to write are excluded from giving consent as neither

Antonio nor Shylock fall under any of the above-mentioned.

As to the concern that perhaps consent of one of the parties may have been vitiated,

particularly that of Antonios, the possibility of vitiation of his consent through

mistake, violence, intimidation or fraud is rendered highly improbable, if not

completely impossible. The negotiation that took place between Antonio and

Shylock refuse any evidence of violence, intimidation or fraud exercised by either of

the party so as to render the contract voidable. As to mistake, it may only invalidate

consent if it is as regards the subject matter of the contract, which in this case is the

loan or the principal condition which moved one or both parties to enter into the

contract. In the instant case, the offer made was clear and so were the terms and the

acceptance absolute, thus consent is manifested. However, it may be argued that

there is mistake because Antonio may have been led to understand that the penal

clause is only a jest. However, it may be counter-argued that he knew that the same

instrument with such provision would be notarized, he is also aware of the negative

relations he has with Shylock which may have given rise to ill feelings of the latter

towards his person, that such stipulation, even if made as a merry sport only, if

taken in the context of the relations he share with Shylock may mean a merry

Page 8 of 13
sport to exact revenge upon his person on the part of Shylock. Even so knowing, he

accepted such stipulation with the knowledge that the same will be notarized.

Furthermore, during the proceedings for the enforcement of the forfeiture of the

bound it is to be noted that Antonio was resigned to such claim and made no such

objections and even affirmed the same through his comment that may judgement be

rendered upon him and let the Jew exact his will. Invoking Article 1333 of the New

Civil Code, there is no mistake if the party alleging knew the doubt, contingency or

risk affecting the object of the contract. Antonio fully understood the terms of the

contract and he is aware of the risk affecting his ability to pay the loan within the

period agreed upon as his assets are all tied to sea at that moment. Shylock himself

stated the risks of such ventures, pirates, spoilage of goods to name a few and surely

Antonio himself, being engaged in such profession fully knows the risks entailed in it

as well, more so himself. Thus, consent is present.

The object of the contract is the loan of the three thousand ducats which is valid in

satisfying the requirements for the validity of an object of a contract as provided for

by Articles 1347 to 1349 of the New Civil Code providing that anything may be the

object of a contract provided that they are not outside the commerce of men,

possible and certain all of which are satisfied by the object of the contract of loan

between the parties in the instant case.

The cause or consideration requirement is likewise satisfied. On the part of Antonio,

it is the loan and on the part of Shylock it is the repayment of the loan within the

Page 9 of 13
specified period. The allegation that Shylocks consideration is revenge is untenable

in that this is not a consideration as defined by Article 1350. Furthermore, basing on

Article 1351 of the New Civil Code, it is seen that the element of desire for revenge

on the part of Shylock is but a motive and not a consideration which would have

rendered such contract void.

Now that the nature of the transaction is established as an obligation with a penal

clause subject to a period. It is seen that the principal obligation of the contract,

which is the loan, is valid and thus stands. It is the stipulation which is the penal

clause, which is but an accessory obligation that is invalid for being contrary to

public policy, basing on Article 1306 of the New Civil Code which provides that

parties may provide terms or stipulations as they may deem convenient, provided

they are not contrary to law, morals, good customs, public order or public policy.

Thus, such stipulation may not be enforced but the invalidity of such accessory

obligation does not extinguish as well the principal obligation upon which other

alternative actions to address Shylocks grievance may be instituted.

(2) WHETHER OR NOT, by virtue of denial of action to execute forfeiture of bond,

Shylock has right to specific performance with damages

In view of the fact that the principal obligation is not extinguished by virtue of

Article 1230 of the New Civil Code which provides that the nullity of the penal clause

does not carry with it that of the principal obligation, Shylock is entitled to find

Page 10 of 13
recourse in alternative remedies. Article 1169 of the New Civil Code provides that

delay is incurred from the time debtor fails to fulfill the obligation at the time of

judicial or extra-judicial demand of the creditor, however, in this case, such demand

is not necessary by virtue of the fact that the performance of the obligation is subject

to a period, once the period lapses and debtor still has not performed, there is

breach.

Article 1165 of the New Civil Code provides for remedy in case of breach: specific

performance or rescission, both may be asked for with damages.

Therefore, Shylock may choose either, and both may be with damages as the breach

is substantial considering the context and the practices prevailing at the time when

the only profession, the only means by which the Jews can make a living was through

the practice of usury as they were barred from owning other properties.

(3) WHETHER OR NOT the applicability of the provisions of laws of Venice

concerning the forfeiture of the properties of a Jew convicted of attempted

murder upon the person of a Christian is valid

In putting this issue within the context of the Philippine laws and at modern times,

the applicability of such law would not be valid considering that the same would

amount to a violation of the constitutional provision stating that no man should be

deprived of life, liberty or property without due process of law. In this case, it may be

argued that Shylock was deprived of his property by taking the same and grating one

Page 11 of 13
half to the State and the other to the offended party as he was not given due process.

He was not even granted his right to counsel or to a lawyer nor to a preparatory time

for the defense to be prepared for the arraignment to satisfy the requirements

provided for by the Rules of Court, particularly Rule 115 Section 1(d) providing right

to counsel and (h) a speedy, impartial, public trial and Rule 119 Section 1 for the

time to prepare for the arraignment.

Furthermore, the penalty for attempted murder, granting arguendo that the same

had been proven to the satisfaction of the requirements of due process and justice is

too excessive and granting that a pardon was granted in Shylocks favor, the

conditions upon which it is based upon are too excessive as well. The sequestration

of his property is an indirect sentence for him to death only more cruel as it deprives

him of the means to live even as you had spared his life.

Furthermore, Antonios conditions impede rights Shylock is entitled to should the

context had been as what was stated in the Statement of Assignments section of this

memorandum. The first that he bequeath all his property upon his death to his

daughter and her husband is a violation of his right to freely dispose of his property

as he would, seeing as Antonio had already waived his right to such property,

invoking Articles 784 and 839 (4) of the Civil Code providing that such act of will

making is purely personal and the invalidity of a will enforced through force or

undue influence.

Page 12 of 13
Conclusion

In view of the foregoing, the conclusion is to uphold the unenforceability of the

penal clause of the contract for being against public policy, thus void, however as the

principal obligation stands, Shylock has grounds upon which he may demand other

alternative remedies and lastly, that the Venetian laws as to the validity of forfeiture

of a convicts property is deemed inapplicable for being excessive.

Recommendations

I would recommend that pursuant to Article 5 of the Revised Penal Code, the penalty

levied upon Jews who would make any attempt upon the life of a Christian be

adjusted accordingly, that is, be toned down, as it is too excessive.

Page 13 of 13