Coasian Bargains: Contractual modifications of property rights to avoid litigation. Should always be considered as an alternative to litigation.

Two Problems that loom large throughout property law: assembly problems and bilateral monopoly:

Assembly Problems: arise when someone wants to assemble property rights from a large number of owners in order to undertake some project. Instance of high transaction costs stemming from large numbers of contracting parties.
- Example is when highways or utility lines are built, each of these projects typically entails the need to assemble a large number of property rights, and each presents high transaction costs as a consequence
Bilateral Monopoly: Localized monopolies- situations in which an owner of property needs something that can be provided by only one other person or entity. “only one seller and one buyer for the contested resourse”.
- Also a source of high transaction costs because each of the parties has nowhere else to turn in order to engage in an equivalent transaction.

If one thinks of property as a type of sovereignty over designated things, then it is important not only to be able to exclude other persons from the thing, but also to be able to include other persons in the use and enjoyment of the thing, and perhaps to be able to exclude oneself from the thing as well. There are a number of basic powers of inclusion or exclusion that the sovereign owner or gatekeeper typically can exercise beyond the basic right to exclude others. These include:

License: the power to give permission to someone else to gain access to property
Bailment: the power to transfer temporary custody of [personal] property to someone else
The power to abandon and destroy property

License: permission from an owner of an asset to another person allowing the latter to gain access to the asset on certain terms.

It is a waiver of the owner’s right to exclude
A license is both TEMPORARY and REVOCABLE (a “mere license” to enter the land of another is always revocable Wood v. Leadbitter)
- Could obviously contract around the default rule and make the license irrevocable
- Property rights to enter the land of another must be created by DEED and once they are created they are irrevocable for their stated term)

Examples: allowing a repair person to enter an apartment to fix a broken dishwasher. If the repair man fails to make the repairs properly, the owner can revoke the license and ask him leave
- If you want to waive the exclusion right, you have to grant someone an interest of greater permanence and security, such as an easement or a lease. The more secure and permanent waivers are often call property rights and are distinguished from “mere licenses”.
  - Licenses are typical created by either oral or written contract
A license only grants limited rights. For example, if you are staying in a hotel room and somebody across the street is being a nuisance, the right to sue that person still rests with the hotel, in contrast to a lessee, where most of the rights of ownership (including the right to sue) are given to the lessee.

License + Grant: Irrevocable until such time the purpose of the grant is fulfilled (Wood v. Leadbitter)

For example, a “license” to enter someone’s land to hunt for and kill a deer. B has an implied license to enter the land for this purpose and the license is irrevocable until the grant is fulfilled or is revoked (because you have a property interest in a tangible object [the deer])

Wood v. Leadbitter: P came to a horse race on the property of D. During the races, the D desired P to leave, and gave him notice that if he did not go away, force would be used to remove him. He refused to go and D removed him using “no unnecessary violence” (i.e. he exercised “reasonable self-help”)

Court hold’s D had the right to remove as the license was revocable. May have been a case for “breach of contract” here [bought ticket to go to race].
- Hurst v. Picture Theatres: contractual right to see a movie, revocation can be governed by contract
- When dealing with well-counseled parties, they can use distinctions and grant intricate rights that detail when they are enforced and when they can be revoked.
  - When no well counseled, harder to determine what parties were trying to accomplish
  - Most of the time when courts see heavily counseled parties, they treat contract verbatim

ProCD v. Zeidenberg: ProCD was selling a database of 3,000 telephone directories. Thus, they were essentially selling a pile of “facts”, it was information in the database. ProCD decided to engage in price discrimination, selling its database to the general public for personal use at a low price, while selling information to the trade for a higher price. For price discrimination to work, however, you have to be able to control who pays what for your product. ProCD attempted to do this through contract.

D bought the consumer package and formed a company to resell the information in the database
Copyright law does not apply to facts, so ProCD attempted to get its consumers to agree to what would be copyright terms through a contract.
Holds contract is enforceable?

Side Note: Property Rights are good vs. the whole world and uniform from asset to asset (rights are same for ever song, movie, etc. =Rights in Rem) Whereas contract rights apply to particular parties in the contract and are customized and costly

Easement: Extends indefinitely. Different from a license in that it gives the right to exclude (stronger than a license because it has third party rights)

Bailment: When the owner of the property (the bailor) temporary transfers custody/control of the property to another (the bailee), but retains ownership

Usually a bailment is created by a contract, express or implied, and the parties have some special purpose in mind that requires the transfer of possession of particular property – after this purpose is accomplished, it is understood that the property will be returned to the owner.
- i.e. transfer of clothing to a dry cleaner, transfer of securities to a broker, or transfer of a car to valet for parking.
  - Since the bailment relationship is usually created by contract, the respective rights and duties of the bailor and bailee have a strong contractual element, and can be modified by agreement of the parties. [blending of in personam and in rem rights]
Since a bailment is the transfer of custody of property, some of the bailor’s rights to ownership-most notably the right to exclude others from the owned thing-are also transferred to the bailee.
- So, bailee’s rights with respect to the thing are similar to those of an owner
- Illustrative of the principle that possession alone, even possession by a non-owner, will bring about some of the legal rights associated with ownership.
FORK: Is this a bailment or merely a license?

Allen v. Hyatt Regency-Nashville Hotel: Plaintiff parked his vehicle in a commercial parking garage. When he came back the car was gone [presumably stolen]. On the back of the parking ticket it said that appellant assumes no responsibility for loss through fire, theft, collision, or otherwise to the car or its content. Tickets are given solely to measure the amount of time a vehicle is parked, not to ID a particular vehicle.

Court says the key question to ask in this case is “would a reasonable person think a bailment has been assumed?”
- Court points to key facts in answering YES to this question: Car was driven into an enclosed, indoor, attended commercial garage with an attended controlling the exit and regular security personnel who patrolled the premises for safety
- Reasonable expectations of the parties is key in bailments
- Court holds a bailment was created, so there was a statutory presumption of negligence that defendant could not rebut
Bailment requires: (dissent)
- Delivery (transfer of physical control) [if there was no human intervention at all, a bailment has not taken place]
- Sole custody and control (this is where the majority and dissent disagree – FORK: was there enough control to create a bailment?) (dissent argues that since the parking attendant[s] did not have the keys, they lacked adequate control.

FORK: What standard of care must the bailee take with the bailor’s property?

Possibilities:

Early common law opinion was that the bailee’s liability to the bailor for lost, stolen, or destroyed goods is absolute. Based on the contractual notion that if the bailee failed to return the good, the bailee had violated the parties’ understanding.
Alternative Set of Rules (Justice Story):

When the bailment is for the sole benefit of the bailor, the law requires only slight diligence on the part of the bailee, and of course makes him answerable only for gross neglect.
When the bailment is for the sole benefit of the bailee, the law requires great diligence on the part of the bailee, and makes him responsible for slight neglect
When the bailment is reciprocal, the law requires ordinary diligence on the part of the bailee, and makes him responsible for ordinary neglect

Some people use a universal “reasonable care” standard (which would take into account the notions above)
“misdelivery” is usually always held at strict liability (Cowen v. Pressprich); this is only for voluntary bailees, right?
“Contractually Modified” Standard of Care: i.e. posting...

#11372 - Powers To Change Rights Of Access - Long Merril & Smith Property Outline

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