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Property I
University of Pennsylvania School of Law
Balganesh, Shyamkrishna


FALL 2010


Two Conceptions of Property

Basic Definition:

· property is socially contingent

· describes the relationship between people with respect to things, not the relationship between persons and things

Bundle of Rights Conception

· Views property as an amorphous bundle of rights, privileges, liberties, immunities, powers, abilities, all of which are vested in the owner – a host of rights

· The precise content of the bundle and relationship among rights in the bundle varies from one circumstance to another, one case to another, one legal system to another – determined by individual cases

· No absolute rights

· Problem: If this is the case, does property really mean anything?

· Bundle of positive rights to use property

· Policy reasons why this is the most popular conception: preeminence of nuisance law, emergence of utilitarian balancing and efficiency rules, and importance of eminent domain

The Right to Exclude Conception

· View that a right is a property right if it includes the right to exclude everyone else from an identified resource or thing

· Property rights should be viewed as a duty to exclude oneself RATHER than a right to use something in a certain way

· Problem: How can this right, if taken as absolute, work in a complex society?

· Negative duty imposed on oneself to exclude oneself (premised on the idea that we want to be able to use things by excluding other people)

5 Principles for Establishing Property (ORIGINAL ACQUISITION)

(1) First possession

(2) Discovery

(3) Creation

(4) Accession

(5) Adverse Possession

Property Philosophical Theories

Normative value – What should give the basis for property?

1. Normative question = what should happen, question of what ought to be – normative prescription is about future-looking

a. Possible normative values:

i. Utilitarian – property exists to maximize the overall happiness or utility of all citizens; property rights should be allocated in manner that best promotes the general welfare of society

ii. Efficiency – try to maximize efficiency in a certain context, then fit that value in our structure of choice/doctrinal framework

iii. Certainty – i.e. less societal friction, less violence used (if ppl know, through exclusion, the more definite – ppl knowing what their rights are up front)

iv. Autonomy/Dignitary Interest – certain things are invested w/ ppl’s dignity or personality – so invasion of bodily integrity (turtle and shell – home is shell – protecting it amounts to protecting your personal autonomy”

1. If we accept this, is exclusion theory of property best fit for maximizing this value of autonomy?

2. Is autonomy meaningful when it’s inefficient? Immoral? Results in disruptive society?

Labor Theory – Locke

· Mixing your labor with something un-owned (i.e. catching a wild fish), that makes it your property.

· If you mix your labor into something unclaimed – it becomes yours. Locke did not think the same was true if you mixed your labor with something that belonged to someone else.

· Nozick’s Tomato Juice Objection of Locke: Just because you’ve poured your tomato juice into the ocean, and therefore mixed yourself with the ocean, is it yours? No.

Utilitarianism – Hume

o We protect other’s possessions as property because everybody is better off that way

o Rule utilitarianism: There are rules that we can create that make everybody better off and everybody has to stick to those rules all the time

o Act utilitarianism: You look at every individual act to see what would have or what will produced the best outcome

· You can use it to guide your decisions ex ante

· You can analyze it ex post

Economic Efficiency

· Generally: we want things to be used in the best possible way

· Property rights are economically efficient because when things are un-owned (Tragedy of the Commons) nobody takes care of them and they get exploited because the costs of abusing the resource are external, while the benefits of taking all you can for yourself is internal.

· Property internalizes costs, gives people incentive to efficiently use and allocate resources.

Coase Theorem – Transaction Costs (pg 30)

o “In a world with zero transaction costs, the initial allocation of entitlement doesn’t matter” because with no transaction costs, parties would be able to negotiate and come to an efficient outcome

§ If contracting is costless, parties will keep contracting to modify initial assigment of property rights until have exhausted all possible deals that would be to their mutual advantage

§ Final stopping point = when use of resources creates greatest joint wealth

· Why? B/c once point reached, neither can offer the other deal that would make them better off

· If we ignore distributional impact, focus only on question of how resources in society are used, the result would be the same regardless of initial allocation rights, provided transaction costs are zero

· Assumption = all individuals are rational ma

erest is protected

o The right to use reflects our practical interest in exclusively using things – duties in rem on everyone else not to interfere w/ our uses of things; if you can’t exclude people you can’t use things…use as a justification for exclusion.

· Conception of Property Law: Don’t think about property as in the rights that you have to use something, think about it as the duty you have (imposed by the law) to exclude yourself from other things

· Penner recognizes that it will be complex, but it is a duty to exclude yourself rather than a right to do something

· “I must not go on your property, unless …..”


· Bundle of rights v. thing-ownership model

o Dissolve notion of ownership, eliminate any necessary connection b/t property rights and things

o Thing can be owned by more than one person

o Most modern “property” is intangible – bonds, corporations, insurance policies, bank accounts

· Discourse about property has fragmented into set of discontinuous usages

· Difficult what to say the special characteristic of property is

· Bundle of Rights conception is a response to the changing nature of property in a changing society. Note: the sticks included in the bundle of rights may not be apparent until a dispute arises and a court rules.

Deontic Reasoning

· Any time you’re talking about a moral obligation, that’s deontic reasoning. Anytime there is a moral connection or a dignitary connection.

Calebresi and Melamed – Property Rules, Liability Rules and Inalienability

· Entitlement issue

o Law must decide which conflicting party is entitled to prevail

o Which entitlements are protected? Allowed to sell/trade entitlement?

o 3 types of entitlements considered

· Entitlements protected by Property rules

o The government lets private parties arrange any transfer at their agreed upon value. Property cannot be taken without the holder’s consent. Someone who wishes to get the entitlement from the holder has to buy it from them in a voluntary transaction in which the value of the entitlement (E) is agreed upon by the seller.

o Injunctions, property law, personal injury law