Should all contracts be enforceable?

[Khun Jean]

If you have no rebuttal to my obviously irrefutable logic, the correct thing to say is, "oh, I see your point... you are so right! And I'm so glad you have pointed out the evil involved in contract law and enforcement before I wasted any more time attempting to earn an unconstitutional title of nobility in order to participate in immoral actions." I'm assuming of course that you are studying law. Is that true? Are you studying to earn a law degree?

Indeed discussing it with you is futile. I get a good laugh out of it though. Studying law, ha ha ha ha..
Mises went over your head i think.

 

[sratiug]

Indeed discussing it with you is futile. I get a good laugh out of it though. Studying law, ha ha ha ha..
Mises went over your head i think.

We all got a good laugh out of your opening post.

Contracts distort markets. Restricting freedom never benefits anyone.

 

[AFPVet]

Contracts are enforceable... you don't want to be in "breech of contract".... Should they? You bet... if contracts were not enforced, people would be in breech all of the time since they would lack "bite". Why even have contracts if they were not enforced by civil law? This introduces the next question... should we even have contracts?

 

[Khun Jean]

I now understand why they say Ron Pauls supporters are kooky. We have a few in this thread.
When you want to alienate about 99.9% of the voters keep talking about 'no contracts necessary'.
Even Ron Paul mentions enforcing contracts, if those of you not agree with that, good luck finding a candidate who does.

 

[pcosmar]

I now understand why they say Ron Pauls supporters are kooky. We have a few in this thread.
When you want to alienate about 99.9% of the voters keep talking about 'no contracts necessary'.
Even Ron Paul mentions enforcing contracts, if those of you not agree with that, good luck finding a candidate who does.

Who is what? Did you read the OP and the Original Premise ?

I had responded,

I am not saying all contracts are bad. Only that they are very often unnecessary.
The OP posed the question, "Should ALL contracts be enforceable?" and then gave examples of illegal or immoral contracts.

If I shake hands on an agreement, (Such price for such repair) it is a contract in a sense. I will honor it. But it is not likely enforceable by law.
On the other hand. I have been sued in court when there was no contract and I had no obligation to pay. And I lost.
I have still not paid one dime and have no intention of doing so. Ever.
Are all contracts enforceable? NO.

I bolded the part that you obviously MISSED.

Not all "contracts" are written in ink on paper. Not all contracts are enforceable by a court.
And certainly, not all court decisions are correct.

It was your statement,,

Without enforceable contracts there would be no free market!

This is simply untrue as has been pointed out.
The only thing close to a "Free Market" in this country is the Black Market, and it functions without contracts or courts.
So a free market can exist without formal contracts.

 

[ronnilingus]

If I shake hands on an agreement, (Such price for such repair) it is a contract in a sense. I will honor it. But it is not likely enforceable by law.
On the other hand. I have been sued in court when there was no contract and I had no obligation to pay. And I lost.
I have still not paid one dime and have no intention of doing so. Ever.
Are all contracts enforceable? NO.

A court could hold a handshake as a contract. It is mutual assent. You are both manifesting your agreement through a handshake. Of course all contracts are not enforceable. My question was if they should be.

 

[pcosmar]

A court could hold a handshake as a contract. It is mutual assent. You are both manifesting your agreement through a handshake. Of course all contracts are not enforceable. My question was if they should be.

Enforced by who?
Can you prove that a handshake was actually made or an agreement reached?
How would you prove this if one party denied it?

It is obvious that agreements should be honored, and honorable people will do so. Or will seek to find an equitable solution if unable to.
But that is not really enforcement.

 

[ronnilingus]

I think it is time for some 'mises'.
http://mises.org/resources.aspx?Id=73a08308-9978-4cb7-a7de-26a2b5a5524d

Thank you, this has been the best response yet. I'm finally starting to understand how contracts are made and upheld in a libertarian society.

 

[ronnilingus]

How does one become a contracts professor and not know the correct answer to this question? The four pillars/corners of a contract are 1) legal intent 2) capacity 3) agreement and 4) consideration. Contracts involving illegal activity cannot be enforced in a court of law.

I am not saying that a hitman or a drug dealer won't enforce it themselves, it won't stand up in a court of law.

Again, my wording may be too ambiguous. I understand that this type of contract will not be upheld in the current court of law. Let me rephrase, why is it beneficial to any society for contracts involving illegal activity to not be upheld in a court of law?

This question digs deeper than what makes a contract a contract. But, I think I am starting to understand from the Rothbard paper. A libertarian society would benefit from illegal contracts from not being upheld because an illegal contract would be interfering with someone's property rights. Our society supposedly benefits because not upholding the contract condemns the activities which the laws have deemed illegal. However, in our society where the laws are not solely focused on property rights, but rather on social and morality issues as well, we mistakenly limit the legal scope of contracts.

So in a true libertarian society, the only illegal contracts would be ones that include the theft or destruction of a non-consenting third party. It would not be illegal to make a contract to buy/sell drugs or sex as long as no ones property rights are infringed upon. (are there other examples of illegal activities in the US that don't infringe on the property rights of others?)

It all comes down to protection of property rights. Sorry if I'm still being unclear, this is all somewhat new to me and I'm trying my hardest to take it all in and fully comprehend everything. I am really excited to learn more about Austrian economics and the philosophy of real liberty.

 

[Becker]

I think your contracts teacher is right.

Laws are primarily made to protect public interest and social order, not individual freedom.

But that aside, I believe our current laws are just fine. A person who is found to have engaged in an illegal contract, or a contract to engage in illegal activity, should be punished for "conspiracy" to commit illegal activity, if we assume there was an intention to do so.

I think you brought up an interesting question, what about entrapment? What about victimless crimes?

 

[osan]

I know a major part of libertarian ideology is the enforcement of property rights and contracts so I am very interested to hear the thoughts of this forum. I am also curious as to how different schools of thought address this question. Thanks!

Any contract that does not violate the NAP should be valid, assuming all the basic elements are present. If people are free, they should be free to enter into contracts. As for enforceability, if it is not then the contract really has no meaning. I might consider a contract unenforceable if the consideration has not been exchanged. If it has, e.g. money being paid in exchange for some item or service and said item or service is not delivered, then enforcement is the only practical remedy, IMO. It is not an initiation of force as some claim. It is force applied in response damages brought upon the person who paid the money and received nothing in return.

If contracts were unenforceable people would run completely amok. The ensuing chaos would not be pretty, IMO.

 

[pcosmar]

If contracts were unenforceable people would run completely amok. The ensuing chaos would not be pretty, IMO.

Yes, and among a moral and civilized people, contracts are self enforcing.

 

[osan]

Contracts are immoral.

This is a very large assertion. Now let us see the proof.

You can't sign away rights given by God.

Who says?

First, if we accept that our rights are in fact a gift, then they are ours and no longer "God's". If they are ours, then we may do as we please with them in terms of ownership. This is especially so if we accept the premise of free-will.

I have to laugh at all the talk I hear from people who seem to think that they have "God" tied to their sleeves. I suspect that all such talk and the beliefs underpinning it is a great raft of hubris-laden, self centered, and misguided thought. "God" may or may not exist, depending on definitions. By mine, God certainly exists. By others, I am conspicuously skeptical. That aside, I seriously doubt that what you assert is true if for no other reason than a lack of logical consistency. Again, going back to the widely accepted premise that we are made in "God's image", assuming it is in fact so and that it means we are similar in our mental architecture, then it really makes no sense whatsoever to gift a being with free will and natural rights while mandating he maintain possession of those gifts. In such a case, "gift" becomes an incorrect term for the bestowals made, "manacles" and "legirons" being the far more apt terms. "Gift" implies freedom to dispose, otherwise it is not a gift but an imposition.

There exists a yawning chasm between "given by God" and "imposed by God", the former implying freedom and the latter a restriction upon it. I trust that this difference is eminently obvious to you now that I have made it apparent in word?

The six elements of a contract derive from sound reasoning based in the assumptions of free will, human freedom, and the property rights that follow therefrom. They make perfect sense, but only where the freedom exists to enter into them. Contracts are AGREEMENTS and as such can only be entered into VOLUNTARILY. This is part and parcel of the very definition of the term, particularly as the six elements relate. There is, for example, no such thing as a mandatory contract, which is a contradiction in terms. Mandates are verbal declarations that are ultimately backed up with physical force.

In a free world - a REALLY free one and not the phony variety such as what we live in - if the six elements of a contract are present and the parties sign on the dotted lines, anything goes including signing away your right to life. That said, things can and do get very fuzzy in cases. Serious questions can arise relating to the elements. For example, that of consent. If there is any degree of coercion the validity of the agreement (i.e. whether it constitutes an actual contract) comes into question. How is consent measured? That is a very tough nut to crack in some cases.

OTOH, I can see your point about basic rights at least from the standpoint of preserving life and limb. For example, if I sign a contract giving away both kidneys for a sum, I am not sure that such a contract should be absolutely enforceable. Of course, the contract-status of such a signed agreement is questionable given that either consent or capacity may fail under scrutiny. E.g., if you are under tremendous financial pressure could that be looked upon as a coercive factor that lead you to sign away what ultimately amounts to your very life? If you were drunk or were in the depths of depression at the time you signed, the issue of capacity may come into question. This is why a judge is required, whether from a court or a volunteer esteemed by his fellows as equal to the task. Which case is basically irrelevant; what counts is that an IMPARTIAL and COMPETENT third party adjudicate such disputes. Regardless of appeals processes being present, the decisions must be ultimately enforceable in a general way or serious problems may arise. OTOH, the question also arises as to what happens when the judge is wrong? I am forced to sign away both kidneys by a party that is either that good at lying to a judge or has paid him off sufficiently to buy the ultimate verdict. Am I, the victim of this UNPROVABLE crime, therefore obliged morally to surrender my kidneys to the other? By no means. But what, then, is the result. Probably death for me as I resist the physical force to be employed to make me comply - or fugitive status wherein I must leave my home and escape to some place where I may be safe. Either way I am screwed. Human interactions in societies are fraught with potential threats as we can see, but if we are to go on from one day to the next, I believe the only practical approach is to play the statistics and do our level best to avoid such extreme situations, which as we can see is really not that difficult to do. As for the rare and hard cases, all I can say is that shit happens and to all those poor maroons who fall victim to such expert criminals, all the best luck to you that you may by some means prevail and regain yourself justly and without further harm.

Continuing the kidney example, what if John agrees in writing to give both kidneys to Robert for $1MM? Does this sound like the doings of someone gone mad? Not necessarily. Perhaps John has a terminal disease and wants to provide for his family in his absence. All of a sudden the idea doesn't sound so nutty. But what if no such condition existed and Robert decided to go collect. If we have a valid contract, then Robert is technically right to do so, but because a man's very life turns on the question of validity it would seem prudent to call in a third party to help settle the matter in the case of a dispute. Someone has to do it because if that mechanism were not in place - a mechanism whose intended function is to preserve the inherent rights of the individual - some measure of chaos would likely reign. The elements of consent, consideration, and capacity are the cores of any contract and where stakes are high I cannot imagine how a peaceable and FREE society of men would be able to survive. The weak would be run over roughshod by the strong as human history demonstrates with countless examples, those to the contrary amounting to a paltry few.

Rights, in order to have meaning, must be enforceable. This is most true with those of the natural variety, but it must also be true contractually or chaos would run amok. Moving forward, each in his own manner and right, would become very difficult and in some cases impossible if the words men used in agreement to do one thing in exchange for another became meaningless. People would stop interacting on anything but the most trivial bases. Complex interactions between humans where the stakes are more than profoundly trivial requires TRUST and UNDERSTANDING. The more complex a transaction, the more prone to misunderstanding it becomes. This is why contracts are invaluable to us - not just to make sure the other performs, but that they do so properly as per the written word. Even then things get screwed up due to the devilish nature of language and the fact that it is nearly a universal truth that any randomly chosen sentence may be interpreted in more than one way. That is why we have supposedly impartial third parties who adjudicate disputes. Not all disagreements stem from dishonesty by parties to agreements. The problem of complete, correct, and fully contextualized language is ENORMOUS. I have worked for 30 years wherein I have held responsibility for contracts ranging from the trivial to those representing better than $250 million of someone's money. In every single case there have been at the very least minimal disputes in the form of questions regarding the precise meanings of language in the contract's body. It is a universal truth that misunderstandings, however trivial in some cases, arise. It is in the nature of these things and because this is so, the utility of the written contract becomes even more significant.

Also bear in mind that EVERY transaction between people may be viewed as a contract; even something as trivial as two people greeting one another with "good morning". If you analyze the exchange very carefully you will note that all elements of a contract are present even in such a case. Therefore, in actuality we cannot even really escape contractual activity. Yes, this is a somewhat silly example, but I raise it simply to point out that the principles are at work at every moment in our lives where we interact with others, so to assert that contracts are immoral is incorrect on its face.

But if you still feel that contracts are immoral, then answer this: without them, what would the world look like? How would people interact with one another, particularly in more complex affairs - especially those where investments of a considerable magnitude are in question? What would happen when one man broke his word to another? Without impartial third party arbitration and ultimate material enforcement, how would the world evolve? Without material enforcement, how would real material torts be resolved, e.g. I pay you to mow my lawn and you never show? How appears the face of this world of yours where no contracts are allowed? Please show all work.

 

[osan]

Yes, and among a moral and civilized people, contracts are self enforcing.

Agreed. I would also add the general requirement that such people exercised good habits of intelligence and mindfulness such that they were not given to carelessly entering into agreements.

Sadly this is not commonly the case anymore as people act on emotion-driven impulse, which is far easier and more pleasurable in the immediate case than to exercise self control, patience, and circumspection in one's choices. Better to act stupidly now for the sake of a polished knob and fight the consequences later than to act as an adult and avoid bringing harm to others now. This is the all too common sort of pathetic attitude that so many people appear to hold, based on their behaviors.

The Hindus have it right: the Kali Yuga is come.

We having fun yet?

 

[osan]

Without the contract, there is no dispute, and no enforcement is necessary. The contract is the cause of the problem, not the solution.

I cannot imagine anyone getting an idea as completely backward as you have managed here. Have you any experience living and working with contracts? By the words you have written I can only conclude that you do not.