An Economic and Comparative Analysis of Specificatio (The Accession Doctrine)

Abstract

The accession doctrine in property law exists in both common law and civil law, but its specific contents are different in important details: the common law disallows bad-faith improvers to gain title, while the civil law generally does not distinguish between good faith and bad faith. There are two tests in transferring title, the transformation test and the disparity-of-value test. Some countries like France stipulate one test, the U.S. requires either test to be met, and in Germany both are required. Finally, not all jurisdictions award compensation to unauthorized improvers who do not gain title. The prior literature has not explored in detail under what conditions is the accession doctrine efficient, not to mention which version of the doctrine is economically superior. This article argues that the accession doctrine is most likely to be welfare-enhancing if designed in the following ways: Improvers have to conduct cost-justified verification, and thus bad-faith and negligently good-faith improvers will not gain title to the chattel in question. Both the transformation test and the disparity-of-value test have to be met. The original owner has no duty to compensate the improver for her labor.

Keywords: allocative efficiency, verification, property rule, liability rule, hybrid rule, title transfer rule, compensation, put option

JEL Classification: K11