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Property, Contract, and Verification: The Numerus Clausus Problem and the Divisibility of Rights

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  • Hansmann, Henry
  • Kraakman, Reinier

Abstract

The law of every jurisdiction defines a set of well-recognized forms that property rights can take and restricts the creation of property rights that deviate from those forms. We argue that these restrictions serve not to standardize rights as others have argued but rather to aid verification of the ownership of rights offered for conveyance. We explore the feasible verification rules for property rights and illustrate the relationship between those rules and the structure of rights they support in the principal fields of property, including use rights to real and personal property, security interests, legal entities, and intellectual property. We offer a simple calculus for assessing the efficiency of alternative property rights regimes. We define clearly the difference between property rights and contract rights, clarify the connection between property rights and property rules, and illuminate the limits on specific performance as a contract remedy. Copyright 2002 by the University of Chicago.

Suggested Citation

  • Hansmann, Henry & Kraakman, Reinier, 2002. "Property, Contract, and Verification: The Numerus Clausus Problem and the Divisibility of Rights," The Journal of Legal Studies, University of Chicago Press, vol. 31(2), pages 373-420, June.
    • Handle: RePEc:ucp:jlstud:v:31:y:2002:i:2:p:s373-420
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    Cited by:

    1. Benito Arruñada, 2020. "Prospects of Blockchain in Contract and Property," Springer Books, in: Amnon Lehavi & Ronit Levine-Schnur (ed.), Disruptive Technology, Legal Innovation, and the Future of Real Estate, edition 1, pages 35-55, Springer.
    2. Antony Dnes & Dean Lueck, 2009. "Asymmetric Information and the Law of Servitudes Governing Land," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 89-120, January.
    3. Amy Whitaker & Roman Kräussl, 2020. "Fractional Equity, Blockchain, and the Future of Creative Work," Management Science, INFORMS, vol. 66(10), pages 4594-4611, October.
    4. Xin Li & Chi-Wei Su & Meng Qin & Fahai Zhao, 2020. "Testing for Bubbles in the Chinese Art Market," SAGE Open, , vol. 10(1), pages 21582440199, January.
    5. Benito Arruñada, 2012. "Property as an economic concept: reconciling legal and economic conceptions of property rights in a Coasean framework," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 59(2), pages 121-144, July.
    6. Arruã‘Ada, Benito, 2017. "Property as sequential exchange: the forgotten limits of private contract," Journal of Institutional Economics, Cambridge University Press, vol. 13(4), pages 753-783, December.
    7. Benito Arruñada, 2009. "The law of impersonal transactions," Economics Working Papers 1187, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2010.
    8. Benito Arruñada & Giorgio Zanarone & Nuno Garoupa, 2019. "Property Rights in Sequential Exchange," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 35(1), pages 127-153.
    9. Lauren Haaften-Schick & Amy Whitaker, 2022. "From the Artist’s Contract to the blockchain ledger: new forms of artists’ funding using equity and resale royalties," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(2), pages 287-315, June.
    10. Benito ArruÒada, 2003. "Property Enforcement as Organized Consent," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(2), pages 401-444, October.
    11. Benito Arruñada, 2010. "Institutional Support of the Firm: A Theory of Business Registries," Working Papers 508, Barcelona School of Economics.
    12. Kenneth Ayotte & Patrick Bolton, 2011. "Optimal Property Rights in Financial Contracting," The Review of Financial Studies, Society for Financial Studies, vol. 24(10), pages 3401-3433.
    13. Donaldson, Jason Roderick & Gromb, Denis & Piacentino, Giorgia, 2020. "The paradox of pledgeability," Journal of Financial Economics, Elsevier, vol. 137(3), pages 591-605.
    14. Benito Arruñada, 2016. "Coase and the departure from property," Chapters, in: Claude Ménard & Elodie Bertrand (ed.), The Elgar Companion to Ronald H. Coase, chapter 22, pages 305-319, Edward Elgar Publishing.
    15. Benito Arruñada, 2009. "Property titling and conveyancing," Economics Working Papers 1177, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Massimiliano Vatiero, 2018. "Transaction and transactors’ choices: what we have learned and what we need to explore," Chapters, in: Claude Ménard & Mary M. Shirley (ed.), A Research Agenda for New Institutional Economics, chapter 11, pages 97-108, Edward Elgar Publishing.
    17. Arruñada, Benito, 2016. "How Rome enabled impersonal markets," Explorations in Economic History, Elsevier, vol. 61(C), pages 68-84.
    18. Marian W. Moszoro & Pablo T. Spiller, 2018. "Implications of Third Parties for Contract Design," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 5-16, March.
    19. Giorgia Bucaria & Giulio Gottardo, 2023. "A numerus clausus rationale for the privity of contract: the protective function," European Journal of Law and Economics, Springer, vol. 55(1), pages 29-59, February.
    20. Rabia Mazhar & Hossein Azadi & Steven Van Passel & Rando Värnik & Marcin Pietrzykowski & Rytis Skominas & Zou Wei & Bi Xuehao, 2023. "Does Contract Length Matter? The Impact of Various Contract-Farming Regimes on Land-Improvement Investment and the Efficiency of Contract Farmers in Pakistan," Agriculture, MDPI, vol. 13(9), pages 1-16, August.
    21. John Armour & Michael J Whincop, 2005. "The Proprietary Foundations of Corporate Law," Working Papers wp299, Centre for Business Research, University of Cambridge.
    22. Jason Donaldson & Denis Gromb & Giorgia Piacentino, 2019. "Conflicting Priorities: A Theory of Covenants and Collateral," 2019 Meeting Papers 157, Society for Economic Dynamics.
    23. Arruñada, Benito, 2018. "Evolving practice in land demarcation," Land Use Policy, Elsevier, vol. 77(C), pages 661-675.
    24. Luminiţa Tuleaşcă, 2011. "The Concept Of The Trust In Romanian Law," Romanian Economic Business Review, Romanian-American University, vol. 6(2), pages 150-160, June.
    25. Whitaker, Amy & Kräussl, Roman, 2018. "Blockchain, fractional ownership, and the future of creative work," CFS Working Paper Series 594, Center for Financial Studies (CFS).

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