Sources of Rights

• Author: Robert Chambers
• Pages: 166-234

166

CHAPTER 8

SOURCES OF RIGHTS

A. INTRODUCTION

This chapter is about the ways in which property rights can be created

or transferred. It is divided into six main parts: gifts, trusts, wills and

estates, land contracts, proprietary estoppel, and sale of goods. As you

read, it is helpful to keep several important distinctions in mind.

1) Intention or Operation of Law

The creation or transfer of property right s is usually done intentionally:

a person chooses to create or transfer a particular right and does what

is necessary to give eect to their intention. Most of this happens sim-

ply and informally. We can acquire ownership of a bag of groceries at

a self-checkout without speaking a word. Some transactions are more

complicated, such as buying a house or making a will.

Property rights can also arise by operation of law even though no

one intended to create them. Some have been discussed in previous

chapters, such as a repairer’s lien (in Chapter 6), a trust that ari ses when

one joint tenant murders the other (in Chapter 5), or a prescriptive

easement (in Chapter 7). Although most of this chapter is about rights

created or transferred by intention, rights arising by operation of law

will also be encountered.

Sources of Right s167

2) Creation or Transfer

The creation of a new right is dierent from the transfer of an existing

right. For example, I can create a new leasehold estate by granting a

lease to a tenant. They might then transfer that estate to someone by

assigning the lease, or they might create another new estate by sub-

letting the premises. If I f‌ind someone’s lost umbrella and pick it up,

I thereby acquire a new right to possession, which is subject to the

owner’s better right to possession. I can transfer my right by giv ing the

umbrella to a friend, or I can create a new right by loaning it to them

(as a bailment). The rules that apply to the creation of a right can be

dierent from those that apply to its transfer.

3) Inter Vivos or Testamentary

A transaction is inter vivos if it occurs during life. It is testamentary if it

takes eect on death. Although the term testamentary normally refers

to something in a will (testamentum in Latin), that term is used more

broadly here to refer to any transaction that takes eect on death. This

distinction matters b ecause dierent rules apply depending on whether

a transaction is inter vivos or testamentary. Generally speaking, more

formalities must be observed to make a gift on death than during life.

The death of a person can have proprietary consequences that are

not testamentary. A life estate ends on the death of the life tenant, and

someone else becomes entitled to poss ession, but that is not a testament-

ary disposition. Similarly, when a joint tenant dies, the other tenants

will enjoy their rights of survivorship, but that is not a testamentary

disposition. Those are just the in herent features of those property rights,

however they are created. A life estate or joint tenancy may be created

by will and so begin as a testamentar y disposition, but the end of a life

or joint tenant’s interest is not testamentary.

4) Gift or Contract

Most property rights are acquired pursuant to contracts. We buy food,

clothes, furniture, homes, and so on. Of course, giving is a big part of

life, with gift s for birthdays, for weddings, or to say th ank you and dona-

tions to charity. Giving is al so a huge part of death, when everything we

own will be given away.

There are signif‌icant dierences between the status of a buyer and

the status of a donee. People who make contracts to buy things acquire

THE LAW OF PROPERTY168

rights to receive them. In contrast, little can be done to help someone

hoping to receive a gift. Also, as discussed in the next chapter on com-

peting rights, the l aw oers greater protection to someone who acquires

something for value than to someone who receives it for free.

5) Law or Equity

The rules for creating property rights depend on whether the right

is legal or equitable. Some property rights are necessarily equitable

because they do not exist at common law, such as the interest of a bene-

f‌iciary under a trust (discussed in Chapter 4) or a restrictive covenant

over land (discussed in Chapter 7). Other rights can be legal or equit-

able depending on the manner of their creation. For example, a long

leasehold estate is created at law by deed or registration (depending on

its location), but an equitable lease can be created by contract. This is

discussed below.

It can matter whether a property right is legal or equitable when

people make competing claims to the same thing. As discussed in the

next chapter, legal rights usually receive greater protection than equit-

able rights.

B. GIFTS

The normal way to make a gift is to transfer legal title to the intended

donee. It is also possible to give them the benef‌its of ownership by cre-

ating a trust for them, with someone else holding legal title. A gift or

trust may be inter vivos or testamentary. Inter vivos gifts are discussed

here. Trusts and testamentary gifts are discussed separately below.

How one transfers legal title depends on the subject matter being

transferred. Goods and cash are normally transferred by delivery,

whereas land is normally transferred by deed or registration. Goods

can also be transferred by deed, but that is less common. Intangible

things (such as copyright s, patents, debts, and company shares) cannot

be delivered and so are transferred by document or registration.

1) Delivery of Goods

Two things are needed to make a gift by delivery: the donor intends to

give, and the donee obtains possession. One without the other is not

sucient. For example, you can buy a book as a gift for a friend, wr ite a

nice message inside, gi ft-wrap it, and even tell them about it, but the gift