Legal Definitions - forestalling the market

Forestalling the market is a historical legal term that referred to a specific type of market manipulation. It involved the act of intercepting goods or commodities before they reached the public market or designated selling place. The primary intention behind this practice was to gain control over the supply of these goods, prevent them from being offered at a fair or reasonable price, and then resell them at an inflated price to consumers. Historically, this was considered a serious offense because it disrupted normal trade, created artificial scarcity, and exploited buyers by forcing them to pay higher prices.

Here are some examples illustrating the concept of forestalling the market:

• Example 1: Agricultural Produce

  Imagine a large town in the 17th century that relies on weekly deliveries of fresh produce from surrounding farms. A wealthy merchant learns that a significant shipment of apples is en route to the town's central market. Instead of waiting for the apples to arrive and be sold by individual farmers at competitive prices, the merchant rides out to meet the farmers on the road. He offers them a slightly higher price than they might expect at the market and buys the entire apple harvest directly from them before they even reach the town gates.

  This illustrates forestalling because the merchant intercepted the goods (apples) before they reached the public market. By acquiring the entire supply, he prevented other sellers from offering apples and gained a monopoly, allowing him to dictate a much higher price to the townspeople once he brought the apples to market himself.

• Example 2: Imported Goods

  Consider a scenario where a ship carrying a rare and highly sought-after dye from a distant land docks at a bustling port. Before the dye can be unloaded and distributed to the various textile merchants and dyers who would typically purchase it in smaller quantities at the port's trading stalls, a powerful trading syndicate approaches the ship's captain. The syndicate offers a lucrative deal to buy the entire cargo of dye directly from the captain, ensuring it never reaches the open market for general sale.

  This demonstrates forestalling because the syndicate acquired the valuable commodity (the dye) before it became available to the general market or other competing merchants. By monopolizing the supply of this rare item, the syndicate could then sell it at an artificially inflated price to consumers or smaller businesses, who would have no other immediate source.

• Example 3: Essential Raw Materials

  In a small, isolated community that depends on a specific type of timber, harvested from a nearby forest, for its construction and furniture-making industries, a new entrepreneur arrives. Instead of allowing the local carpenters and builders to purchase timber as needed from the foresters, the entrepreneur negotiates an exclusive contract to buy all the timber extracted from the forest for the next year, directly from the forest owners, before it can be offered to anyone else.

  This is an example of forestalling because the entrepreneur secured the entire supply of an essential raw material (timber) before it could be offered to the local craftspeople at the customary rate. This action would force the carpenters and builders to buy the timber from the entrepreneur at a significantly higher price, or potentially halt their production, thereby disrupting the local economy and manipulating the price of a vital resource.