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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.

[edit] The theory

The theory begins with the assumption about the inalienability 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 titles 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.

[edit] See also

• Freedom of contract

[edit] References

• Rothbard, Murray, "Property Rights and the Theory of Contracts", The Ethics of Liberty, http://mises.org/rothbard/ethics/nineteen.asp 
• Kinsella, N. Stephan (2003), "A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability", Journal of Libertarian Studies (Auburn, AL: Ludwig von Mises Institute) 17 (2): 11–37 

[edit] See also

• Freedom of contract

[edit] External links

• The Ethics of Liberty--Chapter Nineteen Original theory presented by Murray N. Rothbard.