Also known as: property rule · liability rule · inalienability rule · property rules · liability rules · inalienability · Calabresi-Melamed framework · entitlement rules
Written by attorneys · grounded in primary & secondary sources — see below
A framework classifying legal protections for entitlements. Property rules require the holder's consent before transfer and are enforced by injunctions. Liability rules permit nonconsensual taking upon payment of damages. Inalienability rules forbid transfer entirely.
Preston Pratt owns land in State B but lives in State A. He attempts to suspend alienation for twenty years under a trust. State B applies its property rule limiting suspension periods because the land sits there and the rule protects local circulation interests. State A law would permit longer suspension. The court selects State B law after weighing each state's purpose and connection to the land.
Stop the Beach Renourishment sues after a state court ruling redefines beachfront boundaries. The owners claim the decision takes their property without compensation. The Court treats the entitlement as protected by a liability rule requiring payment rather than an injunction restoring the prior boundary.
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The Brandt Revocable Trust claims fee title to land under an abandoned railroad corridor. The United States asserts an easement. The Court applies a property rule requiring the trust's consent for any transfer of the underlying fee rather than allowing the government to retain the corridor upon payment of damages.
Brown sues a manufacturer alleging a design defect in a prescription drug. The court applies a liability rule allowing the company to market the drug while paying damages for injuries rather than enjoining sales under a property rule.
Becker rents an apartment from IRM Corp. and is injured by a latent defect. The court imposes liability on the landlord under a rule requiring payment of damages rather than an injunction forcing the landlord to restore the unit or an inalienability bar on renting defective units.
Kridel abandons a lease. Sommer sues for rent. The court applies a liability rule requiring the landlord to mitigate damages by reletting rather than a property rule that would enjoin the tenant from leaving or an inalienability rule barring lease termination.
The framework shows that efficiency analysis alone cannot justify condemning slavery. Inalienability is required because the practice violates core values of liberty and equality that market or damage remedies cannot capture.
Supporting sources
A state's interest in applying its rule depends on the purpose of that rule and the state's connection to the land and parties. A property rule limiting alienation periods receives strong weight when the land is located in the state because the state has an obvious interest in maintaining free circulation of local land.
…liability equals losses caused multiplied by . . . the inverse of the probability of suit, injurers will act optimally under liability rules despite the chance that they will escape suit"); Cooter, Punitive Damages for Deterrence: When and How Much, 40 Ala. L. Rev. 1143, 1146-1148 (1989). My understanding of the intuitive…