Wednesday, August 17, 2011

Dorfman on the Difference Between Property and Contract

Avihaydorfman Avihay Dorfman (Tel Aviv) has posted The Society of Property on SSRN.  Here's the abstract:

Property rights and duties, as it is often said, are good against the world, whereas contract rights and obligations apply more narrowly against specific others. The most basic question that arises in connection with this distinction is what accounts for the general scope that property rights and duties, unlike their contractual counterparts, share? Almost all the theories that have so far sought to address this question have emphasized the extrinsic circumstances - such as transaction costs or the normative priority of protecting property over contract rights. In that, these theories might be able to explain the general scope of application characteristic of property rights and duties, on the one hand, and the particular reach of contract rights and duties, on the other.

This starting point, however, implies the conclusion that property and contract rights and duties are, at best, quantitatively different, reflecting differences of degree, not of quality. More precisely, the source of the difference (whatever it is) does not originate in either property or contract, but rather lies outside both (for instance, in the costs of making and carrying out transactions concerning external objects).

Although this approach is perfectly sound as far as it goes, it does not go far enough. In particular, it fails to consider whether the general scope of property rights and duties is, in fact, a side effect of the special structure of property (vis-à-vis contract). Indeed, this possibility can be found once it is sought in the distinctive form of social coordination that property takes. On the account I shall develop, property is a framework of coordination in which participants approach the resolution of their competing claims (such as for use of and access to an object) together. In this way, property turns coordination itself into a form of respectful recognition among persons, quite apart from the functions it serves (such as promoting efficiency or sustaining freedom). This is, I argue, because the duties that arise in connection with a system of property take a categorically social form - that is, they can engender interactions of respect and recognition between persons simply in virtue of their being persons. Duties originating in a contractual interaction, by contrast, may (at best) take a hypothetically social form - that is, they may (arguably) establish relations of respect and recognition in which being a person as such is never sufficient for these relations to get going. This formal way of distinguishing between property and contract obligations lies at the center of the characterization of the duties in question that I shall pursue in these pages. Moreover, and perhaps more dramatically, this characterization provides the necessary normative resources to elaborate on their normativity - I shall argue that property, unlike contract, expresses the categorical value of regarding others as free and equal persons (at least in the sphere of action onto which property maps).

Steve Clowney

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