Economics Questions

Re: What Gives a Contract its validity?

Conza88 — Mon, 27 Jul 2009 06:33:55 GMT

http://mises.org/rothbard/ethics/nineteen.asp

Re: What Gives a Contract its validity?

Bostwick — Mon, 27 Jul 2009 05:43:43 GMT

scineram:

Anarchist Cain:

scineram:

Cannot exchange services in a libertarian society?

Good to know.

I think what he means to say is 'title-transfers'. Services require either barter or currency [ something I think he implied by 'property' ]

But he wants to ban exchanging services for services.

Do you do anything other than misrepresent other's posts?

Re: What Gives a Contract its validity?

Ludwig Von Rothbard — Mon, 27 Jul 2009 05:32:37 GMT

If you are simply asking what makes a contract valid under our existing legal system, the answer is "consideration." A unilaterial promise to do something is not binding. However, if A promises to do X, and, in exchange, B promises to do Y, then there is "consideration." This is often referred to as "quid pro quo," and it is essentially a way of saying that each party must agree to both give and get something as part of the transaction.

It is important to realize that "consideration" is not limited to exchanges of property (as someone suggested in this thread). One person may give property (e.g., money, a dog, a loaf of bread), and the other may give a service (e.g., mow the lawn, wash the windows, do the other party's taxes). Moreover, even if one party agrees to forego something to which it would otherwise be entitled, that would be enough. For example, if person A has the right to sue person B over some matter, the two parties may enter into a settlement contract whereby person A agrees to forego his right to sue B, and, in exchange, person B agrees to pay some money or take some action, etc. That would be enough for "consideration" to be present.

Again, if one person promises to do something but the the recipient of the promised benefit does not promise to give anything in return (or promise to give up something to which that person is otherwise entitled), then there is no consideration, and the promise is not a contract (and is therefore not binding).

Re: What Gives a Contract its validity?

banned — Sun, 19 Jul 2009 06:56:27 GMT

I apologize, I didn't really address my point.

Let me be clear. Simple transferals of services based on "promise" (such as a "you scratch my back, I'll scratch yours" scenario) are not enforceable. However, exchanges in services are validly enforceable when they are backed by performance bonds. If one party fails to perform it's service, the other party would file a lawsuit against them and the court would enforce the payment agreed to in the contract.

Re: What Gives a Contract its validity?

scineram — Sun, 19 Jul 2009 02:18:35 GMT

False. You talked about property exchange. Mutual exchange of services has nothing to do with property exchange.

Re: What Gives a Contract its validity?

banned — Sat, 18 Jul 2009 21:09:07 GMT

scineram:
But he wants to ban exchanging services for services.

I implied non-property based contracts were non-enforceable, not that they should be banned.

To your point, services are based on property. Time and effort must be exerted in performing them, so exchanging in them is an exchange of resources. Signing a document is not based on any such notion nor is making a promise that doesn't invovle such exchange.

Re: What Gives a Contract its validity?

scineram — Sat, 18 Jul 2009 19:51:51 GMT

Anarchist Cain:

scineram:

Cannot exchange services in a libertarian society?

Good to know.

I think what he means to say is 'title-transfers'. Services require either barter or currency [ something I think he implied by 'property' ]

But he wants to ban exchanging services for services.

Re: What Gives a Contract its validity?

Clayton — Sat, 18 Jul 2009 19:45:52 GMT

Esuric:
What if the majority finds you annoying;

This is why government is inherently corrupt. As Rothbard said, government, regardless of its form, always exists by virtue of at least a passive or apathetic assent of the majority. Government is mob rule.

or what if the murderer of your brother convinces the town that you're insane or a liar?

Hence the evolution of things like "rules of evidence", and so on, in courts of law.

Clayton -

Re: What Gives a Contract its validity?

Andrew Cain — Sat, 18 Jul 2009 14:10:59 GMT

scineram:

Cannot exchange services in a libertarian society?

Good to know.

I think what he means to say is 'title-transfers'. Services require either barter or currency [ something I think he implied by 'property' ]

Re: What Gives a Contract its validity?

nirgrahamUK — Sat, 18 Jul 2009 14:10:51 GMT

not services which can not be understood as property.

i.e. laundry service, is the transfmoration of dirty cloth property to clean cloth property, and the transfer of the latter back to he who owns the cloth property and paid for the 'service'

Re: What Gives a Contract its validity?

scineram — Sat, 18 Jul 2009 14:07:33 GMT

Cannot exchange services in a libertarian society?

Good to know.

Re: What Gives a Contract its validity?

banned — Sat, 18 Jul 2009 10:16:44 GMT

What Gives a Contract its validity?

Property. Absent of property exchange, a contract is not legitimately enforceable.

Re: What Gives a Contract its validity?

Esuric — Sat, 18 Jul 2009 10:02:24 GMT

ClaytonB:
Laws are enforced through the ever-present threat of feud. If you murder my brother and I kill you in retaliation, what court of law is going to find me guilty of murder? And if no court of law will find me guilty of wrong-doing, who can retaliate against me for settling the dispute myself without themselves becoming guilty of a crime? This is the logic of a feud. Feuds are unspeakably costly so it is in the interests of every person to avoid one.

What if the majority finds you annoying; or what if the murderer of your brother convinces the town that you're insane or a liar?

Re: What Gives a Contract its validity?

Clayton — Sat, 18 Jul 2009 09:41:17 GMT

Esuric:

AJ:
Did you think anarchy means "no laws"?

My problem with pure anarchy is that I don't understand how these laws would be enforced; by the majority? lol.

Laws are enforced through the ever-present threat of feud. If you murder my brother and I kill you in retaliation, what court of law is going to find me guilty of murder? And if no court of law will find me guilty of wrong-doing, who can retaliate against me for settling the dispute myself without themselves becoming guilty of a crime? This is the logic of a feud. Feuds are unspeakably costly so it is in the interests of every person to avoid one.

Clayton -

Re: What Gives a Contract its validity?

Clayton — Sat, 18 Jul 2009 09:16:48 GMT

Jeremiah Dyke:

I assume that a contract between two or more parties is merely binding law of some future action based on the current action of a signature.

No because you have a right to break a promise. So, saying "Pay me $80 and tomorrow I will give you a lawnmower" does not obligate the speaker/writer to give the lawnmower since he may have been lying (and it would be absurd to outlaw lying). However, saying "Pay me $80 and I will give you a lawnmower which I will deliver to you tomorrow" is entirely different because you are transferring title to the lawnmower in the present. Once the $80 is in your hands, the title has been exchanged and the lawnmower is now property of the person to whom you sold it. If you subsequently fail to deliver what is now his lawnmower, you are aggressing against his property and he may take appropriate action either on his own cognizance or through a court (either way, under law). As Rothbard says in the section of Ethics of Liberty where he talks about this (can't remember what chapter off the top of my head), this might sound like hair-splitting but it is actually a vitally important distinction.

Yet, what gives the contract validity? What is valid about a signature, or even a name--which was forced onto you by your parents? In a free market is it simply a situation where if you break previous contracts you lose out on possible future exchanges, since individuals will know your exchange history.

The signature is just a way for you to indicate your intent in a way that is difficult for others to forge and, therefore, is useful to the recipient as evidence to attest your true intent in a court of law if there were ever to arise a dispute. The signature is not so much a promise as physical evidence. It can later be presented to a court to construct a case of what events transpired in the past. If you signed a contract transferring title to your car to me, then later try to repossess the car claiming I stole the car, my case in court will not be "he promised to give me the car and now he's breaking his promise and going back on his word" but "he transferred the title to the car to me - see, Judge, here's his signature as physical evidence of this event - and his 'repossession' of the vehicle actually constitutes a theft of my property."

Contracts as promises are meaningless in the Rothbardian view. This is why performance bonds are so important, they provide a means to put teeth into contracts by means of conditional transfer of title. "If X fails to do Y, he hereby transfers title to $Z to W." That is not a promise, that is a conditional transfer of title. Crucial difference.

Clayton -