Title-transfer theory of contract
Encyclopedia
The title-transfer theory of contract is a libertarian
theory of contract
enforcement, developed by Murray N. Rothbard, first stated in chapter 19 of The Ethics of Liberty
. In his contract theory, he describes that his theory does not only resemble a logically consistent method, but in his view a more ethical and objective way of enforcing contracts.
of free will
of an individual, consistent with the self-ownership
principle. Rothbard claimed that because no action should contradict one's free will, one should not follow contractual obligations. He explains that one should have the freedom to break a contractual promise, as contracts should not limit one's free will.
In the enforcement of contracts, Rothbard explains a more objective method. He specifies the requirements of the development and enforcement of a contract. In the first step of developing a contract, the contract developer should specify, in case of breach
, the punishments of failure to abide by the contract. He suggests that titles should specify the punishments. In the event of breach, the contractor should transfer the ownership of his or hers property to the non-breaching party as compensation. However, as Rothbard argued, the failure to abide by the contract does not contradict the non-aggression principle
. Only in the failure of the breaching party to transfer their property, the breaching party violated the non-aggression principle
by fraud
of not transferring property. This theory, as the name implied, that title
s of property
should enforce promises on contracts.
Furthermore, as Rothbard claims that since contracts should not limit one's free will, he states the contradictory statement of voluntary slavery
. As he discusses the inalienability of one's free will, he concludes that as slavery inherently alienates the free will, the contradiction of slave contracts shows up.
Austrian economist Stephan Kinsella
improves this theory by linking the title-transfer theory of contract with inalienability theory while also attempting to clarify that theory. For further discussion of the origin of this theory—Rothbard in 1974, Williamson Evers in 1977, and Rothbard in 1982—see Stephan Kinsella's post Justice and Property Rights: Rothbard on Scarcity, Property, Contracts….
Libertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...
theory of contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
enforcement, developed by Murray N. Rothbard, first stated in chapter 19 of The Ethics of Liberty
The Ethics of Liberty
The Ethics of Liberty, by American economist and historian Murray N. Rothbard, first published in 1982, is an exposition of the libertarian political position...
. In his contract theory, he describes that his theory does not only resemble a logically consistent method, but in his view a more ethical and objective way of enforcing contracts.
The theory
The theory begins with the assumption about the inalienabilityInAlienable
InAlienable is a 2008 science fiction horror film written and produced by Walter Koenig, and directed by Robert Dyke.-Plot:Dr. Eric Norris remains wracked with guilt after a terrible tragedy that cost him his family, and when he learns that an alien parasite is not only growing inside him but...
of free will
Free will
"To make my own decisions whether I am successful or not due to uncontrollable forces" -Troy MorrisonA pragmatic definition of free willFree will is the ability of agents to make choices free from certain kinds of constraints. The existence of free will and its exact nature and definition have long...
of an individual, consistent with the self-ownership
Self-ownership
Self-ownership is the concept of property in one's own person, expressed as the moral or natural right of a person to be the exclusive controller of his own body and life. According to G...
principle. Rothbard claimed that because no action should contradict one's free will, one should not follow contractual obligations. He explains that one should have the freedom to break a contractual promise, as contracts should not limit one's free will.
In the enforcement of contracts, Rothbard explains a more objective method. He specifies the requirements of the development and enforcement of a contract. In the first step of developing a contract, the contract developer should specify, in case of breach
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
, the punishments of failure to abide by the contract. He suggests that titles should specify the punishments. In the event of breach, the contractor should transfer the ownership of his or hers property to the non-breaching party as compensation. However, as Rothbard argued, the failure to abide by the contract does not contradict the non-aggression principle
Non-aggression principle
The non-aggression principle , or NAP for short, is a moral stance which asserts that aggression is inherently illegitimate...
. Only in the failure of the breaching party to transfer their property, the breaching party violated the non-aggression principle
Non-aggression principle
The non-aggression principle , or NAP for short, is a moral stance which asserts that aggression is inherently illegitimate...
by fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
of not transferring property. This theory, as the name implied, that title
Title (property)
Title is a legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or an equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document that serves as evidence of ownership...
s of property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
should enforce promises on contracts.
Furthermore, as Rothbard claims that since contracts should not limit one's free will, he states the contradictory statement of voluntary slavery
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
. As he discusses the inalienability of one's free will, he concludes that as slavery inherently alienates the free will, the contradiction of slave contracts shows up.
Austrian economist Stephan Kinsella
Stephan Kinsella
frame|right|Stephan KinsellaNorman Stephan Kinsella is an American intellectual property lawyer and libertarian legal theorist. His electronically published works are primarily published on his blog and websites associated with the Ludwig von Mises Institute and anarcho-capitalist...
improves this theory by linking the title-transfer theory of contract with inalienability theory while also attempting to clarify that theory. For further discussion of the origin of this theory—Rothbard in 1974, Williamson Evers in 1977, and Rothbard in 1982—see Stephan Kinsella's post Justice and Property Rights: Rothbard on Scarcity, Property, Contracts….
External links
- The Ethics of Liberty--Chapter Nineteen Original theory presented by Murray N. Rothbard.