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Freedom to Contract

  • Freedom to contract holds that persons may consent to legally enforceable transfers of their property rights.
  • Freedom from contract holds that transfers of property rights should not be imposed upon them without their consent.
Signing a written contract conveys the message, “I am transferring some of my rights to the other party.”

A fundamental tenet of the liberal conception of justice is that resources rightfully belonging to another may not be taken without the manifested consent of the rights-holder. This tenet bars the use or threat of force to obtain a manifestation of consent; thus, a contract signed or “consented to” under duress is void. In addition to prohibiting force to obtain consent, liberalism has always barred persons from obtaining consent by means of coercion.

Freedom to contract enables persons to transfer rights to resources they have in exchange for rights to resources they would rather have, thereby inducing transfers of rights that benefit both parties to the exchange as well as the recipients of gifts. 

Jim Crow laws restricting the activities of African-Americans in the south, apartheid restrictions on blacks in South Africa, and employment restrictions imposed upon Jews throughout most of history would have been impossible without extensive public property and coercive interferences with freedom of contract.


Not disclosing information is not fraud, but disclosing incorrect information is.


"Imposing a duty to disclose on persons in possession of information that concerns a future change in market demand for a resource eliminates the possibility of profiting from the information, and thereby greatly reduces any incentive for potential traders to engage in an information-revealing transaction. Consequently, a legal duty to disclose extrinsic intelligence to the other party would greatly reduce disclosures of this information to the society at large. Moreover, such a disclosure rule would cause countless persons to be misled. By eliminating the incentive to trade on information, enforcing a duty to disclose would induce persons in possession of extrinsic intelligence inadvertently to convey to the market by their silence the inaccurate impression that future demand will be lower or higher than they know it to be."

   --  Randy Barnett