Powers to Change Rights of Access

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.

Other Powers of the Sovereign Owner

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:

1. License: the power to give permission to someone else to gain access to property

2. Bailment: the power to transfer temporary custody of [personal] property to someone else

3. The power to abandon and destroy property

Licenses

• 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.

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?

Bailments

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