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The Zaccaria Deal: Contracts and options to fund a Genoese shipment of alum to Bruges in 1298

View of Genoa by Christoforo de Grassi (after a drawing of 1481)

The Zaccaria Deal : Contracts and options to fund a Genoese shipment of alum to Bruges in 1298

By Eric Briys and Didier Joos de ter Beerst

Paper given at the  XIV International Economic History Congress in Helsinki (2006)

View of Genoa by Christoforo de Grassi (after a drawing of 1481)

Abstract: This paper analyses one of the most fascinating late medieval commercial contracts. Some have advanced that it is was the first ever written maritime insurance. If any contract is a nexus of options, our inquiry demonstrates that Genoese merchants in XIIIe designed unique option-based provisions in order to match all together: (I) expectations and risk appetite from contracting parties; (ii) the logic of the business model for long distant maritime trade; (iii) the prevailing institutional context. Benedetto Zaccaria (circa 1240-1307), the central figure in this deal, established his leadership in the trading of alum from mines in the East, in today’s Turkey, to Western Europe.

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This leadership was based on his unique business franchise : exclusivity of supply from one of the two biggest alum mines, diplomatic and military connections with many rulers, nautical skills. Zaccaria managed this franchise by numerous contracts with family members, associates, external financiers. These contracts were aimed at both managing his business but also designing original risks management solutions to mitigate, transfer and finance risks attached to his business: price, casualty, currency, liquidity. Contracting had some institutional constraints : the sea loan prohibition (Naviganti, 1334), the absence of a stock-exchange and insurance underwriters, the lack of Genoese sedentary agents and public institutions in Low Countries. However, the Genoese merchants could also build on numerous institutional tools : a range of standard forms of investment contracts, the familial clan (albergo) and network of prominent families, the law organising trade and enforcing contracts.

Introduction: On October 29th, 1298, a rich Genoese merchant, but also a prominent nobleman, diplomat and admiral, Benedetto Zaccaria, and his son, organized a venture focusing on the shipment of 650 cantari, about 35 tons, of alum from Aigues-Mortes to Bruges. Through a remarkable three page notarial contract, the Zaccarias raised capital and transferred some risks to two external investors: Enrico Suppa and Baliano Grillo. This transaction is one of the most fascinating example of original forms of contracting developed during late middle age, and in particular in Genoa. This contract is said to be, among other things, one of the first ever insurance contract ever underwritten.

Click here to read this article from the University of Helsinki

Click here to read the Powerpoint presentation for the Paper

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