As you know, Absolute Austro-Libertarianism is based on the concept of voluntary agreements. This is a key concept, a cornerstone concept. Without it, coexistence among people cannot be achieved. The Master Contract is very specific in this subject. It is only fair then, that we study how these voluntary agreements  or contracts are achieved, because contracts are the key to coexistence.

Why do we insist in voluntary agreements? Because they lead to order. The concept that law and order creates civilization got it backwards. Voluntary agreements created laws and order and therefore civilizations. Now it is time to evolve past laws because they are unnecessary. We just need agreements, which will deliver order and hence maintain civilization.

Fair warning. The subject of contracts is a long and complex one. Luckily enough, the key elements of the Absolute Austro-Libertarian system have the powerful effect of simplifying and clarifying everything. We will show you how needlessly complex current laws and regulations are, and how much simpler our way is.

 

INTRODUCTION

What is a contract and what it is not

A contract is a voluntary agreement between two or more parties creating mutual obligation(s) between them. A contract is a pact between free people acting out their will.  A contract is the observance of a set of minimum rules that ensures reasonable clarity for all involved people when transacting with each other. A contract is a binding agreement or promise that something will or will not occur.

A contract is a permission given to a side of a contract to commit infringement against the other side’s property.

In these lessons, we will speak about people doing the contracting as opposed to “parties”. This is so because even though people may represent companies or organizations, people are actually conducting contract negotiations and agreeing to contracts. The days where computers will negotiate and agree for us are still in the future. So, in order to make matters simple, we will be talking about people contracting.

Without previous agreement, a contract is not a wish list, is not a conversation, is not a hypothetical question or an order.

 

What are the elements of a contract?

A contract has very specific parts.

The standard definition is: the elements of a contract are "offer" and "acceptance" by "competent persons" having legal capacity who exchange "consideration" to create "mutuality of obligation”

This is our definition: the elements of a contract are a “voluntary” “offer” and “acceptance” by emancipated people who represent themselves or are bound by contract to represent others. These people may exchange “consideration” to create “mutual obligations”

As you can see, our definition is not that different from “their” definition. However, these differences are quite significant. This is quite common in Absolute Austro-Libertarian systems, because these systems are evolutions and not revolutions. We take the best of existing ways of coexisting and improve on them. We have no qualms in admitting this, we freely do so.

 

When is a contract “legal”?

A contract is not necessarily a legal obligation because “laws” are created by governments. As we have seen before, governments have privileges, not rights. Governments have the privilege to enact laws but we have the right to take those privileges away from the government because we gave them to them in the first place. If we do so, then laws become invalid. These are our rights.

As our right to take away privileges from the government is absolute (our rights are inalienable – nobody can take them away), we can do so on a personal basis. For example, Johanna may decide that she likes contract laws, but Mary may not. So, for Johanna, her contract may be “legal” because she voluntarily accepts the laws. Mary’s contracts are not “legal” because she rejects government laws. However, both contracts are valid and therefore enforceable.

Contracts are agreements between people first and only then, they may be “lawful” but this is a personal choice. Why would anybody voluntarily agree to make their contract “lawful” is a mystery to us.

All contracts are agreements between people. Period.

The artificial classification that other political and judicial systems assign to their interpretation is… well… artificial and therefore irrelevant. Let’s take a look. Contracts could be interpreted under:

• Common Law: also known as case law or precedent law is law developed by judges through decisions. Judges are representatives of the government, therefore they cannot have rights, only privileges. This distinction is irrelevant.

• Civil Law: is law contained in statues (i.e. books) enacted through people’s representatives or issued by the executive branch. These are typical government laws. Governments cannot have rights, only privileges. This distinction is irrelevant.

• Criminal Law: it has the exact same form as Civil Laws but it deals in penalties, not restitution. Again, this is government law. This distinction is irrelevant.

None of the contractual rules described by these classifications is enforceable if we do not wish to submit ourselves to them.  It is that simple.

As we are Absolute Austro-Libertarians, we will develop this topic assuming you, dear reader, are a reasonable person and want nothing to do with artificial legalese. We will show you how all these complications are utterly unnecessary and ridiculously limiting.

 

Contract formats

What are the formats a contract may take to be considered valid? A contract may take any format that is agreeable to the contracting people. They could be written, verbal or by conduct.

• Written: it means the contents of a contract have been captured in some sort of media (physical or electronic) that can be observed by somebody else. Committing a contract to memory does not count as written.

• Verbal: it means the contents of a contract have been agreed in conversation(s) and there is no other record of that.

• By conduct: it means that we act in a way that signifies our voluntary agreement to a set of conditions. For example, by willingly walking into somebody’s property we agree to put the trash into the trash can.

In other words, whatever works. With emphasis on “works”.

Technically speaking, any of those formats is perfectly acceptable. However, this does not mean that it is a good idea to dismiss the practical side of contracting.

The issue is disputes. If a contract is fulfilled by both sides, then there is no problem and any other analysis is irrelevant. But what happens if one side has a problem with the other? Then a dispute arises. The disputed will be settled based on contractual details. If those details were verbally agreed, then settlement will be much more difficult.

In the event of a dispute, the key question is the evidence, or what is evident or obvious from the contractual conditions. If those conditions are not observable by somebody else, this means that is one side’s word against the other, which could lead to nasty surprises.

And so, from a practical perspective, contract formats do play an important role. They provide different degrees of “evidence” of contractual conditions, should a dispute arise.

If you are buying a house, you will most definitively want to have a written contract. Too much money is at stake. If you buy bubblegum, you don’t need a written contract. A verbal one will more than suffice.

If you walk into somebody’s fence property with warning signs, electrified fences and guard dogs, you will probably want a written contract. On the other hand, if you walk into a park with a sign stating “Please Come In” you probably don’t need one.

Which form you select depends of how much “insurance” you want to protect your terms and conditions should a dispute arise.

This is no different from what is happening today. In this sense, the Absolute Austro-Libertarian system mimics today’s best practices.

 

Breach of contract

A contract is a voluntary agreement between people. But people are imperfect and greedy. What is to stop people from agreeing to a contract and then breaching it? In a word: damages.

As described in the Master Contract, infringing on somebody’s property without a voluntary agreement makes a person automatically liable for the full extent of the infringement. Breaking a voluntary agreement means that you don’t have that agreement any longer. Which means that whatever infringement you have committed against other people’s property, it was done without their agreement and therefore you are fully liable.

Note: please see the Glossary if you are unfamiliar with certain words.

Continue to Contracts Are The Key To Coexistence - Part 2