Contractual Specification of New Property Rights in Resources: The Problem of Measurement Costs

Free market environmentalists propose new private rights in resources to support market-based methods of regulation, without reference to the relational nature of property and the need to coordinate multiple rights in assets. For property law to perform its coordination function, the rights must be well-defi ned and supplied with a full set of rules (specifi cations) for their creation, enforcement and termination. As the development of fully specifi ed new property rights is costly, Australian legislators are embracing a shorthand method which relies on contractual specifi cation of the rights by private parties, and empowers them to bind their successors in title. A requirement to record the agreements is insuffi cient to address the measurement costs to third parties, who must assess the meaning and effect of variable terms that may or may not be within the scope of the enabling Act.