The Owner's Interest in Only Partial Protection of Her Rights Toward Third Parties: The 'Market-Overt' Rule Revisited

Abstract

The paper analyzes alternative rules for settling conflicts between right owner and a bona-fide purchaser. The optimal rule, so it is argued, is the one that maximizes the expected value of the ownership right, given the risk of right-violation. The owner seeks to both mitigate the risk of right-violation and augment potential buyers' willingness-to-pay for the right. The analysis challenges two intuitive prevailing notions regarding the "Market Overt" rule and specifies the terms in which this rule, which favors the good-faith buyer, maximizes the expected value of the ownership right.

Keywords: Good Faith purchaser, Market Overt rule, title dispute

JEL Classification: K0, K11