Title-transfer theory of contract

The title-transfer theory of contract (TTToC) is a legal interpretation of contracts developed by economist Murray Rothbard and jurist Williamson Evers. The theory interprets all contractual obligations in terms of property rights,^[1] viewing a contract as a bundle of title transfers. The TTToC stands in oppositions to most mainstream contract theories which view contractual obligations as the result of a binding promise.^[2]^[3] Proponents of the approach often claim it is superior on grounds of both consistency and ethical considerations. The TTToC is often supported by libertarians.

Interpretation of contracts

The TTToC considers a contract to be a transfer of property titles between parties to the contract. Title transfers can be conditional, implying a title transfer is to take effect only if a specified condition is met, as well as future oriented implying a title transfer is to take effect at a specified future point in time. For example, in a loan contract the lender transfers title to the principal to the borrower, and the borrower transfers to the lender a future title to the amount of the principal plus the interest. When the loan matures the transfer of title from borrower to lender takes effect, and the lender is entitled to obtain the money, which now belongs to him. It is important to mention the lender is entitled to obtain the money only when that money exists and is in the possession of the borrower. Another example is a service provision contract in which the service consumer transfers a future title of money to a service provider on the condition that a certain act of service is performed. If the service is not provided the condition of the transfer is not met and the conditional title transfer of money does not take effect. Contracts can be agreed upon either by explicit verbal agreement (as is the case with formal written contracts) or by implicit representation of agreement (as is the case when a restaurant order is placed by a passerby).

Fraud

Under the TTToC breach of contract is only what can be interpreted as an act of theft.^[4] For example, if a specified condition for a conditional title transfer from party A to party B is not met, yet party B still captures possession of the property he is not entitled to, he has committed theft, whether the possession was taken by force, or by false representation of fact creating the impression the transfer conditions has been met.

If a service provider has failed to perform an act of service, he has not committed theft. In such cases provisions should be made in advance for the non-breaching party to be entitled to compensation, in the condition of a failure to provide the agreed upon service.

Implications

Since the TTToC is based on property rights, it is compatible with the non-aggression principle. The TTToC ensures ownership of every owned good is well defined at any point in time. Contracts regarding unalienable property titles are not binding. Some argue that since ownership of one's body is unalienable, voluntary slavery contracts are not binding under the TTToC.^[5] Promises that are not made with the intention of being legally binding are also non-enforceable under the TTToC.^[6] http://www.bu.edu/rbarnett/some.htm

References

^ Rothbard, Murray N. (1982). "19". The ethics of liberty. Atlantic Highlands, N.J.: Humannities Press. ISBN 0-391-02371-3. Their error is a failure to realize that the right to contract is strictly derivable from the right of private property
^ E. Barnett, Randy (July 1992). "Some Problems With Contract As Promise". Cornell Law Review. Archived from the original on 2013-01-23.
^ Fried, Charles (1981). Contract as Promise (PDF). Cambridge, Massachusetts: Harvard University Press. ISBN 0-674-16925-5.
^ Kinsella, N. Stephan (Spring 2003). "A Libertarian Theory of Contract: Title Transfer, Binding Promised, and Inalienability". Journal of Libertarian Studies. 17: 11–37. Ultimately, contracts are enforced simply by recognizing that the transferee, instead of the previous owner, is the current owner of the property. If the previous owner refuses to turn over the property transferred, he is committing an act of aggression (trespass, use of the property of another without permission) against which force may legitimately be used.
^ , Each man has control over his own will and person, and he is, if you wish, "stuck" with that inherent and inalienable ownership. Since his will and control over his own person are inalienable, then so also are his rights to control that person and will. That is the ground for the famous position of the Declaration of Independence that man's natural rights are inalienable; that is, they cannot be surrendered, even if the person wishes to do so. {{citation}}: Missing or empty |title= (help)
^ . But a moral theory of promising, standing alone, would have courts enforcing purely moral commitments, which is tantamount to legislating virtue. Such an open-ended rationale leads to serious problems for the value of freedom of contract. First, it commits courts to enforcing promissory commitments that the parties themselves may never have contemplated as "contractual" or legally enforceable, thereby undermining the value of freedom from contract. Second, once the moral behavior of the promissor is deemed relevant to the issue of enforceability, the promise theory also appears to make relevant to the issue of enforcement other moral aspects of the promisor's behavior that may argue against enforcement, thereby undermining the value of freedom to contract. In this manner, the common-law rights of contract can come to resemble the judicial discretion of a court of equity. {{cite journal}}: Cite journal requires |journal= (help); Missing or empty |title= (help)

External links

The Ethics of Liberty. Chapter Nineteen – Original theory presented by Murray N. Rothbard.
Rothbard, Murray, "Property Rights and the Theory of Contracts", The Ethics of Liberty
Kinsella, Stephan (2003), "A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability", Journal of Libertarian Studies, vol. 17, no. 2, Auburn, AL: Ludwig von Mises Institute, pp. 11–37
Kinsella, Stephan (2010), "Justice and Property Rights: Rothbard on Scarcity, Property, Contracts…", The Libertarian Standard
SOME PROBLEMS WITH CONTRACT AS PROMISE — Randy E. Barnett

[The_ethics_of_liberty_19-1] Rothbard, Murray N. (1982). "19". The ethics of liberty. Atlantic Highlands, N.J.: Humannities Press. ISBN 0-391-02371-3. Their error is a failure to realize that the right to contract is strictly derivable from the right of private property

[SOME_PROBLEMS_WITH_CONTRACT_AS_PROMISE-2] E. Barnett, Randy (July 1992). "Some Problems With Contract As Promise". Cornell Law Review. Archived from the original on 2013-01-23.

[3] Fried, Charles (1981). Contract as Promise (PDF). Cambridge, Massachusetts: Harvard University Press. ISBN 0-674-16925-5.

[A_LIBERTARIAN_THEORY_OF_CONTRACT:_TITLE_TRANSFER,_BINDING_PROMISES,_AND_INALIENABILITY-4] Kinsella, N. Stephan (Spring 2003). "A Libertarian Theory of Contract: Title Transfer, Binding Promised, and Inalienability". Journal of Libertarian Studies. 17: 11–37. Ultimately, contracts are enforced simply by recognizing that the transferee, instead of the previous owner, is the current owner of the property. If the previous owner refuses to turn over the property transferred, he is committing an act of aggression (trespass, use of the property of another without permission) against which force may legitimately be used.

[The_ethics_of_liberty_19_2-5] , Each man has control over his own will and person, and he is, if you wish, "stuck" with that inherent and inalienable ownership. Since his will and control over his own person are inalienable, then so also are his rights to control that person and will. That is the ground for the famous position of the Declaration of Independence that man's natural rights are inalienable; that is, they cannot be surrendered, even if the person wishes to do so. {{citation}}: Missing or empty |title= (help)

[SOME_PROBLEMS_WITH_CONTRACT_AS_PROMISE_2-6] . But a moral theory of promising, standing alone, would have courts enforcing purely moral commitments, which is tantamount to legislating virtue. Such an open-ended rationale leads to serious problems for the value of freedom of contract. First, it commits courts to enforcing promissory commitments that the parties themselves may never have contemplated as "contractual" or legally enforceable, thereby undermining the value of freedom from contract. Second, once the moral behavior of the promissor is deemed relevant to the issue of enforceability, the promise theory also appears to make relevant to the issue of enforcement other moral aspects of the promisor's behavior that may argue against enforcement, thereby undermining the value of freedom to contract. In this manner, the common-law rights of contract can come to resemble the judicial discretion of a court of equity. {{cite journal}}: Cite journal requires |journal= (help); Missing or empty |title= (help)

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Contract law

Formation
Capacity Offer and acceptance Meeting of the minds² Abstraction principle^4,5 Posting rule¹ Mirror image rule Invitation to treat Firm offer Consideration^1,4 Implication-in-fact Collateral contract
Defences
Misrepresentation Mistake Threats and unequal bargaining power Illegality and public policy Unconscionability Culpa in contrahendo² Force majeure Frustration of purpose Impossibility Impracticability Hardship Set-off Illusory promise¹ Statute of frauds¹ Non est factum¹ Unclean hands¹ Accord and satisfaction¹ Exculpatory clause
Interpretation
Parol evidence³ Contract of adhesion Integration clause Contra proferentem UNIDROIT Principles
Dispute resolution
Choice of law clause Forum selection clause Hague Choice of Court Convention Arbitration New York Convention UNCITRAL Model Law Mediation Singapore Mediation Convention Enforcement of foreign judgments Hague Judgments Convention
Rights of third parties
Privity of contract¹ Assignment Delegation Novation Third-party beneficiary
Breach of contract
Anticipatory repudiation Cover Exclusion clause Efficient breach Deviation Fundamental breach
Remedies
Specific performance³ Money damages Liquidated, stipulated, or penal damages³ Rescission
Quasi-contractual obligations
Promissory estoppel¹ Quantum meruit¹ Unjust enrichment Restitution Negotiorum gestio²
Duties of parties
Duty of honest contractual performance (or doctrine of abuse of rights)⁶ Duty of good faith (also implied covenant of good faith and fair dealing or duty to negotiate in good faith)⁷ Contract A and Contract B⁶
Related areas of law
Conflict of laws Commercial law
By jurisdiction
Australia Canada China (mainland) Ireland India Saudi Arabia United Kingdom England and Wales Scotland United States
Other law areas
Tort law Property law Wills, trusts, and estates Criminal law Evidence
Notes
1 Specific to common law jurisdictions 2 Specific to civil and mixed law jurisdictions 3 Historically restricted in common law jurisdictions but generally accepted elsewhere; availability varies between contemporary common law jurisdictions 4 Specific to the German Bürgerliches Gesetzbuch and other civil codes based on the pandectist tradition 5 Explicitly rejected by the UNIDROIT Principles of International Commercial Contracts 6 Specific to Canadian contract law both in Québec and in the country's common law provinces 7 Specific to civil law jurisdictions, the American Uniform Commercial Code, and Canadian jurisprudence in both Québec and the common law provinces pertaining to contractual and pre-contractual negotiation
v t e

Interpretation of contracts

Fraud

Implications

See also

References

External links