Q:
I have a question regarding your defence of the ‘Title Transfer Theory of Contract” pursuant to Ch. 9 of your book Legal Foundations of a Free Society.
The question is as follows: ‘Are you familiar with Lukasz Dominiak and Tate Fegley’s 2022 criticism of the title transfer theory of contract? If so, what are your thoughts regarding the arguments made by Dominiak and Fegley? Do you feel that the title transfer theory of contract– as advanced by yourself, Rothbard and Evers– ought to be abandoned or amended in light of Dominiak and Fegley’s criticisms? Alternatively, do you believe that Dominiak and Fegley have erred in their analysis? If so, how?’
Thank you for your time Mr Kinsella, and I hope to hear from you soon. I am most interested to hear your views! 🙂
Kinsella:
I think they (DT) are in error. Their paper misdescribes (TTT or as I call it, TTTC), or at least the way I present it.
They go wrong in their first sentence: “Some libertarian scholars claim that the title transfer theory of contracts (henceforth TTT) is the only theory that accurately explains which contracts should be legally binding in a free society.”
Unfortunately this is an example of Brandolini’s Law, according to which it takes “The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.” I.e., it would take me over 100 pages to fully refute the confusions in this piece. One reason I have not responded yet. (Though I don’t think they are spouting “bullshit”; it’s a sincere attempt to grapple with a difficult issue.)
As I explain in my own chapter/paper on this, TTT does not view contracts as “binding” at all. Contracts are not enforceable obligations that arise from certain promises. They are just ways by which a property owner can consent to others use of his resources, whether temporary or permanent, conditional or unconditional, contemporaneous/immediate or in the future (in which case it is necessarily conditional–on the resource to be transferred existing, for one). Since there are no binding obligations, there is no way to breach a contract at all. There is no such thing as breach of contract in the TTT system. In conventional contracts failure to perform a binding obligation puts one in breach and thus he must pay damages, which usually amounts to transferring some title to some money to the other party. In TTT if one fails to perform a specified action it can be a condition or trigger of a title transfer happening–a “damages” fee, if you will. But it’s not really damages since there was no breach. There was only a specified transfer of property (resources).
The authors are mired in the conventional view of contracts which is why they seem unable to describe even the TTT without saying binding, and why later they express befuddlement about why promises are not binding, even though Rothbard and Evers, and perhaps more explicitly I, have explained precisely why.
Their next sentence continues in this vein: “According to the TTT, a contract ought to be enforceable if and only if the debtor’s failure to abide by the contract amounts to an implicit theft of the creditor’s private property,…”
Again, contracts are not “enforceable” under TTT, and it is not based on implicit theft. It is simply based on the recognition that, on the one hand, uttering a promise doesn’t give rise to a binding obligation because (a) no one is entitled to “rely” on your promise; (b) the promise in and of itself does not necessarily suffice to consent to a transfer of title; and, on the other hand, that owners of resources have the right and ability to consent to a transfer of title or usage rights to the resources they own.
It is true that Rothbard goes astray at one point in his TTT by trying to deal with debtor’s prison issues, and he states that failure to pay a future debt is implicit theft. He does not use this observation to argue that contracts are enforceable, however, or that promises are binding, though Walter Block does take it in this direction by arguing that voluntary slavery contracts are enforceable. I believe Block has effectively rejected the TTT as D&T here do. I also have criticized Rothbard for mangling his own presentation of the TTT with this debtor’s prison discussion, but we can forgive him for not getting such a monumental, revolutionary and pioneering theory perfectly right on the first try.
DT write:
In the present paper we argue that the TTT should be rejected as not being able to account for the binding force of future-oriented contracts, including contracts that are central for the operations of the free market and openly classified as enforceable even by the libertarian proponents of the TTT themselves. Crucially, we demonstrate that no default of the debtor in a future-oriented contract can in itself amount to an implicit theft of the creditor’s property. However, because according to the TTT the only contracts that should be legally binding are exactly those where the debtor’s failure does amount to an implicit theft, then it follows that no future-oriented contracts should ever be enforceable if the TTT were to stand. Since this conclusion is not only generally unacceptable but also specifically rejected by libertarians, the TTT should be abandoned.
Future-oriented contracts need not be viewed as “binding” but only as effective. So we start out with a straw man. Also they are not “enforceable.” Default is not implicit theft, but implicit theft is not needed for the TTT. TTT does not say that only implicit theft makes contracts legal binding. This paper’s entire thesis and framework is confused. You can have future-oriented title transfer—as an exercise of ownership by the owner of a resources—without bringing in binding obligations or binding promises, enforceable obligations, and so on.
In short this whole paper is based on presumptions I think are not right. “A contract theory tries to ascertain which agreements between persons ought to be legally binding.” Notice that DT cannot help using this “legally binding” framework. They are stuck in it. So again they repeat, “According to the TTT, agreements between parties ought to be legally binding if and only if a default of one party results in this party’s detaining the other party’s property without the latter’s consent, that is, in an implicit theft.”
And yet again, I repeat, my understanding of TTT has nothing to do with implicit theft, or binding. Now DT may have some complaints about Rothbard and Evers’ non-legal treatment of TTT. Instead of trying to cram their pioneering theory back into the “binding agreements” framework and then criticizing it based on these grounds, I tried to see what made sense and was good about the core theory, and ignored the few legal defects they made in their case. After all, they are not lawyers or legal scholars. I maintain that the core idea is powerful and right and that is why I re-stated and built on and elaborated on it in my own piece. That is call I can defend, and TTT do not really address this.
DT write:
Contracts are enforceable because a property title or possession has been exchanged between parties and these parties are now duty-bound to act in such a way as to respect each other’s newly acquired property rights.
Well. Everyone is “duty-bound” to respect others’ rights. If you own Blackacre then others have to respect that—it has nothing to do with contract but with the nature of in rem, or erga omnes, rights. This is true whether you own Blackacre because you homesteaded it or because or a contractual transfer. The previous owner has to respect your property rights in Blackacre just as anyone else does, and not because he has a contractual obligation, but just because you are now the owner.
In short, I submit that DT’s confusions result from some misstatements by Rothbard and Evers about implicit theft.
I would go on, but to fisk this whole paper would at some point require 100 pages. I think they would need to start again by carefully reading my own reconstruction of the Rothbard-Evers TTT. That is the one I am defending: my own version of it.
