The Presumption of Equal Value in an Exchange of Property

Abstract

When drafting rules of civil (private) law, the legislature uses various methods to formulate particular provisions, among the most important of which are provisions establishing presumptions. Presumptions may be incorporated into legislation in different ways: they may be expressly laid down or inferred through the interpretation of a legal rule.

In the latter case, the presumptions are indirect or implied. Identifying such presumptions is a matter of practical rather than theoretical importance, since they affect the proper exercise of the parties’ rights and performance of their obligations. A presumption produces legal consequences by determining the correct allocation of the burden of proof and, where the presumed fact is rebutted, whether a particular substantive right may be exercised or is excluded.

The scope of the study is limited to an analysis of Article 522 of the Civil Code of Georgia (hereinafter referred to as the “CC”), including from a comparative legal perspective. The provision does not contain words expressly indicating a presumption, such as “it shall be presumed”, “it shall be deemed” or similar expressions; nevertheless, it is regarded in the literature as a provision containing a presumption. The contract of exchange (Tauschvertrag) is one of the oldest legal institutions. Even in a pre-monetary economy, it performed a central function: maintaining balance in relations between individuals and coordinating proprietary interests. The system of exchange was based on the idea that every economic good could be valued and equated with a legal good of equivalent value.

This is the origin of the presumption of equal value – the assumption that the property exchanged is, by its nature, of equal value. Roman law treated exchange as an “innominate contract” (contractus innominatus), since no separate contractual form existed for it. Nevertheless, both legal practice and doctrine attributed legal significance to it: under the influence of praetorian law, an obligation arose once one party had performed its duty to transfer property, whereupon the other party became obliged to perform a corresponding act.[1] This historical background demonstrates that, in legal terms, exchange has always been associated with the idea of equality.

The rules governing contracts of sale also apply to contracts of exchange, which in itself indicates how frequently disputes arise from contracts of exchange and sale. Nevertheless, Georgian legal literature contains neither a monographic study of the issue nor even a separate study devoted to the presumption that the property exchanged is of equal value.

[1] Zimmermann R., The Law of Obligations: Roman Foundations of the Civilian Tradition, Oxford, 1996, 515-520.