Optimal Standardization in the Law of Property: The Numerus Clausus Principle
Thomas W. Merrill
Columbia University - Law School
Henry E. Smith
Harvard Law School
Yale Law Journal, Vol. 110, October 2000
In all post-feudal legal systems, the basic ways of owning property are limited in number and are standardized, in the sense that courts will enforce as property only interests that are built from a list of recognized forms. In the common law, this principle has no name and is invoked only semi-consciously; it is known in the civil-law tradition as the numerus clausus. This Article adopts this term for the corresponding understanding in the common law, and advances an information-cost theory that explains the ubiquity and durability of the doctrine. The numerus clausus can be seen at work in a variety of areas, including estates in land, concurrent interests, nonpossessory interests, interests in personal property, and intellectual property. The Article argues that the principle serves throughout the law of property to reduce third-party information costs. Because of their in rem nature, property rights give rise to third-party information costs in a way that contract rights do not. Individuals trying to avoid violating property rights or investigating whether to acquire them need to gather information. Those creating property rights will in some situations have too little incentive to conform to the most popular forms, requiring a degree of mandatory standardization. As it operates in practice, the numerus clausus strikes a rough balance between the costs of frustrating parties' objectives on the one hand and third-party information costs on the other. The Article demonstrates that this information-cost theory provides a better account for the numerus clausus than do alternative positive and normative views, including those based on the sufficiency of notice, network effects, private standards, anti-fragmentation concerns, and the increasing importance of contract-based rights. Finally, the Article shows that, because it tends to preclude judicial innovation in the basic forms of property rights, the numerus clausus acts as an institutional-choice mechanism that channels innovation in the menu of property rights to legislatures. In keeping with the basic information-cost theory, legislative creation and abolition of property rights is likely to lead to lower information costs than would judicial entrepreneurship in this area.
Keywords: property, estates, standardization, numerus clausus, network, fragmentation, measurement, contract
JEL Classification: K11, K12, D83Accepted Paper Series
Date posted: March 8, 2001
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.391 seconds