5. How is an ownership interest transferred between individuals?
• Contracts – Contract law provides rules under which people agree to exchange value. Contracts, express and implied, are the dominant manner by which individuals exchange real and personal property. Contract law is a staple of a developed rule of law system. Enforceable contract rights provide confidence in undertaking economic activity with others. Increased confidence drives economic productivity.
⁃ Discussion: Do you believe that contract law has an effect on economic activity? Why or why not? If so, what is the effect and why?
⁃ Practice Question: Abby and Frank are sitting in the cafeteria eating their lunch. Abby notices that Frank has a delicious chocolate bar. Frank notices that Abby has a bag of his favorite potato chips. Abby agrees to trade her potato chips for Frank’s chocolate bar. Who owned the chocolate bar and potato chips before and after the trade?