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Why does the legal system promote property rights?

Cite this article as: Jason Mance Gordon, "Why does the legal system promote property rights?," in The Business Professor, updated January 1, 2015, last accessed March 30, 2020, https://thebusinessprofessor.com/knowledge-base/why-does-the-legal-system-promote-property-rights/.
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The Constitution (and all amendments thereto) provides the basic structure for the Federal Government. It also delineates the rights of all US citizens. These rights can be viewed as a form of property that is protected against government infringement. The structural provisions of the Constitution allow for the establishment of a legal system that further protects and promotes individual rights. The federal, state, and local governments create and enforce laws that flow from these protections.

  • Criminal law – Seeks to protect the property of individuals from harm by others.
    • Example: Think of your state’s criminal statutes regarding theft and vandalism.
  • Contract law – Allows for the formalization of relationships between individuals.
    • Example: A breach of contract actions allows individuals to enforce the rights established through contract.
  • Tort law – Allows for the remediation of or recover for harm to property suffered due to the actions or inactions of others.
    • Example: Individuals can sue others for intentionally or negligently harming them or their property.
  • Property Law – Allows for the recognition of ownership rights. Also, the legal system affects property rights through the recognition of business entities. Business entities are organizational forms that have an existence separate and independent from the owners or employees of the entity. Allowing the formation of entities to carry on commercial activity has a wealth-spreading effect that allows individuals to more effectively undertake commercial activity.

Discussion: Can you think of specific examples of how executive actions, criminal laws, tort laws, contract laws, or laws of business entities serve to protect property rights?

Discussion Input

  • Legal systems incorporate different laws in the protection of property rights. Since ownership of property can be interpreted in many ways, laws such as contract, business, criminal, and tort laws all play a huge role in property rights protection. For instance, a defendant on trial for battery or criminal assault may argue that his actions were justified in a bid to protect his property from the alleged victim. The law of torts, however, may restrict the use of force in the protection of property as compared to the protection of oneself or another person. Businesses and individuals also enter into contracts, especially for service provision. It is not uncommon for property right to overlap contractual rights. Take this example: Both contact laws and property rights will guide a sale of land. There are contractual rights to sue for any damages, and property rights are exercisable over the land. Failure to honor a contract by one party may lead to a lawsuit, through which the complainant seeks redress for damages.

Academic Research

Blattman, Christopher and Hartman, Alexandra and Blair, Robert, How to Promote Order and Property Rights Under Weak Rule of Law? An Experiment in Changing Dispute Resolution Behavior Through Community Education (May 30, 2013). Forthcoming in American Political Science Review. Available at SSRN: https://ssrn.com/abstract=2268045 or http://dx.doi.org/10.2139/ssrn.2268045.

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