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Considerations on classification of good in fungible and non-fungible.

1. Definition. Distinction criteria

Fungible goods (1) are those that can substitute each other in performing an obligation; they can substitute each other in payments and reimbursements (money, cigarettes, food, etc). Non-fungible goods are those that cannot substitute each other in order to absolve the debtor; in other words, these are the ones considered in their individuality and cannot substitute each other (a race horse, an old gold coin, a painting, reproduction furniture, a numbered copy of a limited edition, etc). (2)

2. The practical interest of classification

First, this interest lies in the institution of compensation (article 1143 of the Civil Code) that assumes the existence of the fungibility as an object between the two compensated obligations. (3) The compensation is fully enforceable as provided by article 1617 paragraph 1 of the New Civil Code--as soon as there are two certain debts, liquid and due, irrespective of their origin, having as object an amount of money or a quantity of fungible goods of the same nature. Indeed in case two persons are mutually debtor and creditor to each other it becomes useless to perform an obligation with the same object as the other one's obligation. This object identity is conceivable only if each of the two parties have no advantage in performing by the other party of its obligation; this is the case when the goods that represent the object of the two obligations are fungible.

Second, the sale has different effects as regards the fungible or non-fungible goods. Thus the seller of a non-fungible good (certain, determined) must deliver to the buyer that particular good without having the possibility to substitute it with an equivalent one; on the contrary, the seller of a fungible good has the possibility to make that replacement since his commitment does not refer to a determined copy of it. (4) However based on a legal document the parties may convene that a good fungible by its nature may be considered non-fungible; the other way round the parties have the possibility to convene that an obligation having a specific object may be also valid by execution of another good than the contracted one. After that the buyer of a non-fungible good (hypothetically a certain, determined good) immediately becomes the owner (article 1674 New Civil Code). (5) It is a different case with a buyer of general goods as long as they have not been individualized; until they are individualized the seller remains the owner and bears the risk of losing them for causes of force majeure. (6) Therefore the rule of consensus does not ensure the transfer of property; the moment of conclusion of sale is postponed in time until the object of the sale is specified, identified, determined (article 1678 of the New Civil Code); this operation is made either through an effective transmission of those goods either before their delivery through any specification or a preservation of the objects (for example, in a storehouse belonging to the seller or to a third party).

Thirdly, the importance of classification lies in the consequences of the proportion between the fungibility and the consumption. The consumer goods [article 544 paragraph (1) of the New Civil Code] are usually fungible goods (food, fuel, etc.). Only in exceptional cases a consumer good is not also fungible.

One must emphasize that the consumption represents a quality of the good related to its form of use while fungibility represents only a connection that one good may have with another one or another ones. In case the owner of the good entrusts a temporary holder with a consumption good he gives up his rights on this good since this good shall unavoidable be consumed or alienated by the holder. However this operation shall take place even if the owner does not transfer this right because he only transfers the detention. This abstract thing entrusted to the holder has the capacity to individualize itself again in another thing having the feature of being fungible with the consumed good. (7) As already said before this is the reason why the use of the consumption good could not be conceded without its fungibility and without the obligation of the holder to replace it.

Unlike the consumption goods the technique of fungibility may be applied to a consumption loan, to a quasi-benefit or to an irregular deposit that may have as object any good that is not completely consumed from its first use but whose fungibility allows the temporary holder to perform his obligation of returning it by rendering to the owner a good equivalent to the one he received from him. (8)

Finally, the fungibility is the one explaining the fact that the holder of a universality of goods may return it with a different structure than the original one. Certainly he is bound to return the exact universality of goods that was entrusted to him but he is not obligated to maintain the structure that the universality of goods had at the moment he received it because he is permitted to alienate the goods contained by this universality however with the obligation of replacing them.

Fourthly, if the document does not specify a place of payment, this shall be different depending on the goods that are being transmitted: for a distinct determined good (non-fungibil), the place of its transmission is the one where the good is at the moment the document is concluded [article 1494 paragraph (1) letters b) and c) of the New Civil Code] and for the general goods (fungible), the domicile of the debtor.

Fifthly, the practical importance of this distinction results from the action of claim also. If the fungible goods have been mixed with other fungible goods of the debtor of the same type and quality, their execution shall be possible in kind; certainly their identification shall be difficult but not impossible. In this respect it was asserted that the idea that the fungible goods are intrinsically undeterminable is false; (9) the confusion makes the request simply unfounded for lack of evidence of the situation of the property. According to the New Civil Code since the exception of property is admitted (article 1684), the claim may address other goods than those the owner was dispossessed of.

If the goods are no longer in his possession he may be sentenced to replace them with other fungible goods so that the owner may obtain a restoration in kind. In case of lack of fungible goods the debtor shall be bound to pay their equivalent as an amount of money; the claim is therefore transformed in a right of outstanding receivables. (10)

Finally the doctrine asserts that if some fungible and consumer goods by their nature are deposited, the depositor owner may agree that the trustee may consume by use the deposited goods and on maturity date he shall return to the depositor a similar quantity of goods of the same kind and quality. (11)

3. Comparison with res genera and res certa

One may notice from the definition of the term that the difference comes from a physical reality as well. Indeed in the surrounding world things exist in an infinity of copies and if they are not absolutely identical at least they are undifferentiated by our senses. In respect to those things the human being usually does not consider the particular but the kind (in article 1103 the Civil Code uses the term species). Things determined by counting, measuring, weighing are things of kind (5 kilos of flour, 20 liters of gas, etc.). (12) Things of kind are fungible among themselves; they are interchangeable. This also includes real-estate values, shares and bonds even if they are quoted on stock exchange. For example the commodity exchange markets provide negotiation conditions for sales and buys of goods that are fungible and mobile by their own nature or fungible and mobile by anticipation [article 1 paragraph 4 of Law 357/2005].

On the other hand there are things--as we have already shown--which even if they belong to the same kind they are different by particularity; each copy is unique, unsusceptible of quantity. In its particularity it represents a certain body (article 1102 of the Civil Code speaks about "certain and determined body"). The certain things or goods (individual) are in antithesis with things or goods of kind. Those things certain or determined by individual characters are not fungible with any other category of goods. (13) Fungibility is constantly missing in real estate because even if they were alike they could not occupy the same place in space (for example, two buildings or two plots of land). For movable goods--it has been said--that if there are enough characteristics so that our senses may not make mistakes their fungibility seems a priori excluded (animals, clothes made on order, etc.).

However the law remodeled the nature by human being's utility and use or by the contractor's intent more than by the physical fact given; therefore in distinguishing between fungibility and non-fungibility the commercial prevails and not the natural. (14) Thus the sale of a horse that won the Grand Prix means the sale of a certain determined good while the sale of 10 horses for ploughing or transport is a sale of goods of kind. However in exceptionally cases certain goods (immovables) may appear as goods of kind (for example the sale of plots of land for construction which are sold by square meters, each square meter being fungible with the others). The other way around, things that on first sight may seem of kind they may become determined by the parties' will. For example, copies of the same edition are fungible goods; however if they are numbered differently or if one of them belonged to a notorious person they might not be fungible for the bibliophiles.

One may apprehend that bearer movable values such as bearer securities of the same issuance are fungible. It was even said that the fungibility of the currency is an absolute fungibility since it can be reported to all other goods (since they may be measured in money) having the capacity to substitute them in performing the obligations. (15)

4. Fungibility and real subrogation

Real subrogation refers to the replacement of one good with another one. The consequence of this substitution is that the replacing good is under the same property right as the replaced good; it shall be claimed and the real rights and privileges that might affect or charge the substituted good shall be related to it. (16) This technique is useful since it provides a certain legal security. The real subrogation and the fungibility have an important role in the de jure and de facto universalities of goods. (17) Within the patrimony the real subrogation ensures the permanent renewal of the general pledge of the creditors by replacement of the lost or alienated goods. On the other hand the fungibility of the active elements is based on the rule of pecuniarity since all goods may be transformed in money.

Surely the fungibility and the real subrogation may not be mistaken. That is because on the one hand they approach a different point of view with regard to replacement of goods and on the other hand because they are not necessarily combined. In other words the fungibility of two goods does not necessarily mean they may be replaced. Moreover the subrogation of one good with another one does not require their fungibility, it may operate independent of this respect.

Even though it has been asserted that there is an objective relation between goods that dictate the subrogation (based on the idea that they embed the same value) this analysis does not explain those cases of real subrogation when a certain good takes another one's place without having the same value. For this consideration a reasonable explanation is the one resulting from the economic relation of exchange that exists between certain goods. The economic relation of exchange finds considerable support in the idea of causation: a good whose appropriation is caused by the disparity (legal or material) of another good takes the place of the previous one as regards the particular condition of appropriation of the latter one. (18)

NOTE

* The present inquiry was made by contract POSDRU/89/1.5/S/61968, strategic project 61968 co-financed by the European Social Fund through the Sectorial Operational Program--Human Resources 2007-2013

REFERENCES

(1.) Etimology: deriving from the latin fungibilis--to consume.

(2.) Beleiu, Gh. (2006), Civil Law. Introduction to the Civil Law. Subjects of the Civil Law. 10th edition revised and completed by M. Nicolae, P. Trusca, Bucharest: Universul Juridic, 103; Ungureanu, O. (2007), Civil Law. Introduction. Bucharest: C.H. Beck, 119; Pop, T. (1993), Romanian Civil Law. General Theory. Lumina Lex, 88; Cosmovici, P.M. (1994), Civil Law. Introduction to Civil Law. Bucharest: All, 89; Lupan, E. (2000), Civil Law. General Part. Cluj-Napoca: Dimitrie Cantemir Christian University, 126; Ungureanu, O. and Munteanu, C. (2010), Essay on Classification of Goods in the Civil Law, Bucharest: Universul Juridic, 115-124.

Article 543 (1) of the New Civil Code states that goods are classified in fungible and non-fungible. Fungible goods are determined by numbering, measuring or weighing, so that they can be replaced by other goods in performing an obligation [Article 543 (2)]. Based on a legal act a fungible good by its own nature can be considered non-fungible (3). This statement is welcome in the textbook of goods despite the fact that some authors consider that it should be placed in the law of obligations. From this point of view the Code followed on the special manuals and courses as well.

(3.) A full study over the patrimony stated that the general sense of the fungibility might be expressed by the idea of accessibility for exchange (Stoica, V. (2004), Civil Law. Main civil rights, 1, Bucharest: Humanitas Publishing House, 50). According to the author this means that a good has economic value in the extent it can be exchanged since the economic value is an exchange value. In this respect a distinction must be made between the material accessibility of an exchangeable thing and the legal accessibility of an exchangeable thing. The first situation refers to the possibility of the physical separation between the subject and the object of the patrimony right while the second situation assumes the existence of an authorisation of the law for appropriation of nonphysical goods (ibidem).

(4.) Also see Ungureanu, O. and C. Munteanu (2008), Treaty of Civil Law. Assets. Main Civil Rights. Bucharest: Hamangiu, 93-96.

(5.) However as regards the risk of contract the New Civil Code applies the rule according to which even if the property was transferred to the receiver the risk remains a delivery obligation of the debtor unless otherwise stipulated [art. 1274 para (1)].

(6.) Muresan, M. (1992), Civil Law. General part. Cluj-Napoca: Cordial SRL, 45.

(7.) Zenati-Castaing, Fr. and Revet, Th. (2006), Civil Law. Assets (Droit civil. Les biens). 3rd edition, Paris: PUF, 240.

(8.) Ibidem.

(9.) Zenati-Castaing, Fr. and Th. Revet, op.cit., 242; the authors show that in case of circumstantial impossibility of claiming the fungible goods there is the possibility to stipulate that things that are mixed may be claimed in any situation and that this result is fully enforceable when the goods are fungible for reason of their integration in a universality of goods; in this case the claim shall not address the fungible goods but the universal thing containing them (ibidem).

(10.) J. Carbonnier prophesied "In a civilisation that is becoming at the same more collective and more accountable the role of fungibility seems to increase." "In the future the real rights over the individualized goods shall be substituted more and more with a right of receivables against the company for an adequate quantity of fungible goods;" a dematerialisation of property takes place, a material divorce (idem, (2006), Droit civil. Les biens. 19th edition, Paris: PUF, 104).

(11.) Reghini, I., S. Diaconescu, and P. Vasilescu (2006), Introduction to Civil Law. volume II, Cluj-Napoca: Sfera Juridica, 73.

(12.) Individualization by weighing, measuring, counting must be contradictious thus meaning that it must take place in the presence of the contracting parties or their representatives otherwise the sale is inoperative; the cash and carry system represents an exception since the buyer admits that the individualization took place (Popa, I. (2008), Sale-Purchase Contract. Comparative Study on Doctrine and Jurisprudence. 2nd edition, Bucharest: Universul Juridic, 429).

(13.) Our doctrine rightfully emphasized that although the fungible and nonfungible goods and the ones particularly determined with the generic ones are part of two categories, and these two categories of goods are in close connection (Harosa, L.M. (2008), "Considerations on classification of the church's temporary goods," PR no. 2: 52). On the other hand it was emphasized that the category of generic goods is close up to the edge of identification to the category of fungible goods and the category of particularly determined goods is close to the one non-fungible goods (Reghini, I. Diaconescu, S. Vasilescu, P. op.cit., 72); for the division of the goods determined by particular characters and the goods determined by generic characters, please see O. Ungureanu, op.cit., 119-120.

(14.) Carbonnier, J. op.cit., 97.

(15.) For a study on the coin, see Ungureanu, O. and C. Munteanu (2010), "Considerations Regarding the Currency in the Civil Law," RRDP no. 2: 162-200.

(16.) For the content of the general real subrogation and the comparison between this one and the real subrogation with particular purpose, please fully see Stoica, V. op. cit., 1, 82-89.

(17.) Indeed the real subrogation appears as a conclusive piece in construction of the patrimony at Aubry and Rau (Droit Civil Francais, t.IX, par Esmein, paragraph 576, 313, apud R. Libchaber). It first came out with Romanists within their universalities of goods and it has as first role ensuring the uniformity of the whole despite the transformation of the parts: I.

(18.) Zenati-Castaing, Fr. and Th. Revet, op.cit., 243.

Cornelia MUNTEAN

munteancornelia@ymail. com

Lucian Blaga University, Sibiu
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