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A '''contract''' is a | A '''contract''' is an agreement by which people transfer titles to [[property]]. In everyday usage it names a binding promise, usually written; in libertarian legal theory the promise is not the essential thing, and the difference has consequences for which agreements may be enforced and how. | ||
==The title-transfer theory== | |||
[[Murray N. Rothbard]] argued that a contract is enforceable only insofar as it transfers title to an alienable good. On this account a contract is not a promise that the law compels a person to keep; it is a conveyance, possibly conditional or deferred, of something the transferor owns. What makes non-performance actionable is therefore not the breaking of one's word but the retention of property that now belongs to somebody else.<ref name="ethics">[[Murray N. Rothbard]]. [https://freecapitalists.org/books/the-ethics-of-liberty/ ''The Ethics of Liberty''].</ref> | |||
Two consequences follow, and both are counter-intuitive on the promise view. | |||
* '''A bare promise creates no obligation enforceable by force.''' If a person promises to meet a friend and does not, he has behaved badly, but no title has moved and there is nothing to recover. Breaking a promise is not theft. | |||
* '''Taking payment and failing to deliver is enforceable,''' because money was transferred on a condition that has not been met. This is also why [[fraud]] is analysed as theft rather than as a separate wrong. | |||
==Inalienability== | |||
Because a contract transfers title, it can transfer only what its maker can actually alienate. Rothbard held that a person's will cannot be alienated: he can transfer property, and he can agree to a penalty for non-performance, but he cannot make himself the property of another. A voluntary slavery contract is therefore not merely wicked but void, since the thing it purports to convey is not conveyable. | |||
The same reasoning limits specific performance of personal service. An employer whose employee walks out may recover property conveyed conditionally, but he may not compel the labour itself, because labour was never his to own. | |||
==Contract without the state== | |||
Because [[anarcho-capitalism|anarcho-capitalists]] deny the state a monopoly on adjudication, the enforcement of contracts is one of the standard objections put to them, and a substantial literature answers it by pointing to arrangements that already work this way: private arbitration, the historical law merchant developed by traders across jurisdictions, credit reporting, bonding and the ordinary discipline of reputation in repeated dealings. | |||
==See also== | |||
* [[Property]] | |||
* [[Fraud]] | |||
* [[Exchange]] | |||
* [[Aggression]] | |||
* [[Private law society]] | |||
==References== | |||
{{reflist}} | |||
[[Category:Economic concepts]] | [[Category:Economic concepts]] | ||
Latest revision as of 05:47, 16 August 2026
A contract is an agreement by which people transfer titles to property. In everyday usage it names a binding promise, usually written; in libertarian legal theory the promise is not the essential thing, and the difference has consequences for which agreements may be enforced and how.
The title-transfer theory
Murray N. Rothbard argued that a contract is enforceable only insofar as it transfers title to an alienable good. On this account a contract is not a promise that the law compels a person to keep; it is a conveyance, possibly conditional or deferred, of something the transferor owns. What makes non-performance actionable is therefore not the breaking of one's word but the retention of property that now belongs to somebody else.[1]
Two consequences follow, and both are counter-intuitive on the promise view.
- A bare promise creates no obligation enforceable by force. If a person promises to meet a friend and does not, he has behaved badly, but no title has moved and there is nothing to recover. Breaking a promise is not theft.
- Taking payment and failing to deliver is enforceable, because money was transferred on a condition that has not been met. This is also why fraud is analysed as theft rather than as a separate wrong.
Inalienability
Because a contract transfers title, it can transfer only what its maker can actually alienate. Rothbard held that a person's will cannot be alienated: he can transfer property, and he can agree to a penalty for non-performance, but he cannot make himself the property of another. A voluntary slavery contract is therefore not merely wicked but void, since the thing it purports to convey is not conveyable.
The same reasoning limits specific performance of personal service. An employer whose employee walks out may recover property conveyed conditionally, but he may not compel the labour itself, because labour was never his to own.
Contract without the state
Because anarcho-capitalists deny the state a monopoly on adjudication, the enforcement of contracts is one of the standard objections put to them, and a substantial literature answers it by pointing to arrangements that already work this way: private arbitration, the historical law merchant developed by traders across jurisdictions, credit reporting, bonding and the ordinary discipline of reputation in repeated dealings.