Contracts: The Challenges of Time and Distance

Contract law adds strength to the fabric of our society. Hundreds of years of case law and documents such as the Uniform Commercial Code reflect our collective values and conceptions of fairness. On a large scale, contract law is especially important because it governs vital cogs in the world economy. As the borders of our realm expand, so will our economy, and the law of contracts will have to adapt to fit the challenges of the new frontier.

We will begin by exploring the concept of a "meeting of the minds" which is one of the basic requirements of contract law. Later posts will explore other problems, such as consideration, bilateral v. unilateral contracts, remedies and defenses.

In order for a contract to form, there must be a "meeting of the minds". This requirement, also referred to as "mutual assent," is met when there is a valid offer and acceptance. In order for a party to create a set of legally enforceable promises (AKA a contract), they must both intend to be legally bound, and they must be in agreement about the terms of the agreement. The concept sounds deceptively simple.

To illustrate potential problems with this requirement, I would like to pose a hypothetical situation:

Hans is the seller of the most delicious ice cream made from the milk of a very special breed of cow. The cows can only survive on his home planet of Tastia, orbiting the star Proxima Centauri. Kalell, who lives in Chicago, has been dying to taste some of that ice cream ever since he was a little kid. As successful doctor, he can finally afford the ridiculous shipping and handling charges that come with interplanetary deliveries. Assuming he has to order directly from Hans, how should Kalell go about forming a binding contract for the sale of the ice cream? Kalell and Hans are separated by 4.2 light years.

The transaction is problematic on its face. Einstein tells us that information cannot travel faster than the speed of light. That means that Kalell's order would reach Hans in 4.2 years. How can they come to an agreement as to the price and flavor of the iced cream when their negotiations take so long? Hans could not likely keep his prices the same for long enough to support an advertisement on Earth. Fluctuations in the supply and demand of energy, cows, flavoring, and other commodities would almost definitely change the price over the course of 4-8 years, the time it would take for Hans to communicate the price and for the buyer to transmit payment.

This is not an entirely new concept to mankind. Before there were telephones, airplanes, and the Internet, men were confronted with a nearly identical problem. How did people in past centuries buy goods from far away places? Journeymen.

A valid offer gives the recipient of that offer the power to create a legally binding contract by accepting. It also must be sufficiently specific in its terms. This is nearly impossible without somewhat rapid communication. Instead of one large contract for the sale of goods, interstellar trade will likely involve a series of smaller contracts made by intermediaries.

Long ago, when a boy wanted to learn a trade, he would usually get himself an apprenticeship with a local master. Once he gained sufficient proficiency in his trade, the master would send him out into the world as a journeyman. Because the master could not just list his products on the Internet, he would send out an agent who would sell his goods with the ability to negotiate changing prices as required by fluctuating market demands. This journeyman would leave with a supply of the product or raw materials to make the product. He would, hopefully, return with proceeds of the sales, and give the Master a portion of it.

One can foresee a similar situation with regard to interplanetary commerce. A spacecraft could leave Hans's home planet of Tastia with no specific orders, but with the ingredients available to make many different kinds of iced cream. It would travel from planet to planet selling his goods for the highest price he could get at any given planet. Hans's interests could be protected by strict rules about the lowest price he will accept, but leave the journeyman spacecraft to enter into individual contracts with distribute rs on each planet.

A chain of journeyman spacecrafts would produce a sense of stability for buyer and seller. Hans would be able to ship his product immediately. He would dictate the price of his commodity based on the cost of producing it at the time the ship leaves port. Hans could keep prices secret on his home planet, so that the commodity would carry this information to it's destination. In this way, market information would effectively travel as fast as the goods. Assuming Kalell lives on a planet with weekly shipments of iced cream from Hans's journeymen, he would perceive changes in the market price of the product at the same rate that they changed on Hans's home planet. He would always know how much he could buy the product for, and would be able to enter into a binding contract with the journeyman, who's proximity to Kalell would allow appropriate negotiations and a meeting of the minds.

Without faster-than-light communication, a system such as this would be necessary for any commerce between parties separated by extremely large distances. This is more of a economic solution to a contract problem, rather than any drastic changes in the law of contracts itself. It is especially attractive because it avoides the largest problem of all: if communications take years to reach a party, how could you ever enforce a contract between parties separated by such a vast distance? Service of process, preliminary motions, and travel to an equidistant trial venue would take so long that it would be impractical to ever take someone to court. If a contract is not enforceable, it has lost any meaning whatsoever.

There are changes that could be made to the law as well. The Universal Commercial Code (UCC) governs many rules of offer and acceptance with regard to the sale of goods. This Code has adapted the law of contracts to more easily facilitate trade. For instance, the UCC allows parties to make a binding contract without reaching an exact price. Interstellar commerce will likely require even more relaxed rules with regard to contracts. Parties separated by shorter distances, perhaps one light year, could utilize a more relaxed contract scheme by which parties could connect prices and conditions to other factors. One can foresee a trade relationship in which the price of a commodity on one planet would have an inverse relationship with the price of that same commodity on the other planet. By utilizing this zero-sum relationship, one could affix the cost or terms of a contract to some other, predictable commodity that would ensure fair dealings.

Whether one takes an economic approach to this problem or a contract law approach, it is clear that the current relationship often available between the manufacturer of a product and the purchaser will have to undergo some significant changes. A meeting of the minds is not possible in the traditional sense, but the goals of this element of contract law can be achieved with some creative, out-of-the-box thinking.

Property Law: Extensions of Terrestrial Theory, Part I

Most law students take Property Law at some time during their first year. At first the law of property may seem inherently Terrestrial, as it has arisen out of disputes between human beings over earthy possessions. But the fundamental legal doctrines that underlie modern property law can be extended to Extra Terrestrial circumstances with a little imagination and a firm understanding of the public policy concerns which have shaped this particular area of jurisprudence. The Property posts will explore how the ideas disseminated in first year Property Law classes can be extended to accommodate mankind's expansion beyond our Terrestrial world.

Being a law student myself, I would like to take a moment to explain that the ideas explored in this article should be viewed as isolated from all other areas of law. Any lawyer will tell you that a legal issue will most often have implications in several areas of law. For that reason, it is important to remember that these are extensions of Property Law, and have not been tempered with any other bodies of legal knowledge, such as the Law of Contracts, Civil Procedure, or Torts. While these other areas of study are important, it would not be practical to complicate our conversation beyond the scope of Property Law. Contracts and other bodies of legal knowledge will be explored in later posts.

Now that that I have relieved myself of any serious scholarly obligations, we can begin the thought experiment at hand. When one begins the study of Property Law, it is helpful to begin on a small scale. Property classes traditionally begin with disputes over found or captured property. This includes wild animals, natural resources, and abandoned property. The cases addressing found or captured property tell us that in order to possess an object, you must exercise a measure of control over it that is reasonable given the nature of the object itself. For instance, you possess a wild animal by depriving it of it's liberty (capturing it) or asserting a carnal control over it (killing it). Similarly, one might possess the contents of a sunken ship by initiating a recovery effort, but not by merely marking the ship's position with a floating device. The important thing to remember is that the requirements for possession differ depending on the object, and are derived from the nature of the object itself. This is the seminal question because the party who actually possesses a wild or abandoned object is usually recognized as the rightful owner of that object.

How does this principle extend to outer space? Well, just as people have disagreed over who actually owns a mutually hunted animal, or an abandoned but valuable object, they will continue to disagree over who owns certain resources beyond the grasp of our planet's gravity. For example, imagine an asteroid that is traveling within our solar system, perhaps in the Kuiper Belt (a collection of asteroids), which is composed of large quantities of precious metals. This object, traveling at a high rate of speed throughout our solar system, can be likened to a wild animal. While many Terrestrial governments and private institutions will likely want to claim ownership of it, the true owner, according to modern property lay, will be the party who reduces it to possession. In order to reduce the asteroid to possession, the party must exercise the appropriate level of control over it.

What is the necessary level of control? In order to control an animal, one must trap it or kill it. An asteroid is like a wild animal in the sense that its nature is to elude capture by traveling. The largest animals generally killed for profit are whales. A popular property law case tells us that when actually restricting the object's movements is not practical, marking the animal with a bomb lance will be sufficient to possess it. If this concept is extended to an asteroid, the appropriate level of control might be achieved by placing a permanent marker on the object such as a probe or a flag. This marker would inform other parties that the asteroid has already been claimed.

We can also gain a level of insight into this subject by comparing an asteroid to a home run baseball. In a well known case, two parties argued over who owned an especially valuable home run baseball. The court in this case decided that the person who held the ball for a reasonable period of time should be considered the true owner, but one who was first to hold it but was deprived of this possession by the actions of a frenzied mob should also retain some possessory interest in it. If these concepts are extended to our asteroid scenario, a party could possess the asteroid by encapsulating it and restraining its movement. This property right could, however, be dampened if another party had previously accomplished similar goals with respect to the asteroid, but was somehow unjustly deprived of control over it.

These concepts do not apply only to asteroids. An abandoned satellite or space station could also be possessed in a similar way. So could other objects such as comets or other flying objects. The complications come with the unique challenges of restraining these objects. One can imagine a scenario where one party begins mining an asteroid while it is still moving. Later, another party is able to stop the asteroid, and anchor it to a planet. These parties could very well end up in litigation to resolve the question of who actually owns the asteroid.

The root of this analysis is that extra-terrestrial objects are, in general, not so different from the objects we are familiar with so as to elude the grasp of Property Law. Just as human technology has changed our capabilities with regard to capturing and altering wild animals and natural resources, we can imagine that later generations will be able to exercise control over celestial bodies that at the present moment seem impossible. They will most likely turn to the Law of Property for guidance on how to resolve ownership disputes, just as we have turned to previous cases for guidance in how to resolve the unique property issues of our own age.

To Begin: The Outer Space Treaty of 1967

Laws that extend to outer space and the heavenly bodies will, of course, begin with our Earthly laws. Believe it or not, the global powers began preliminary discussions on the topic before the 1960s. The first major legal document produced by these discussions was The Outer Space Treaty. This treaty, formally known as the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, was drafted in 1967 and is the basis of international space law. Although it began with the United States, the United Kingdom, and the Soviet Union, today it has been signed by over ninety countries around the world.

So what did the world powers talk about when they discussed what laws should govern outer space? Nuclear weapons, of course. The treaty, which was drafted under the tensions of the Cold War, functioned mainly to prohibit the placement of nuclear weapons in orbit or on any celestial body. The nations agreed that there would not be any military bases, fortifications, or similar installations. Weapons testing is also banned, as is any other weapon of mass destruction aside from nuclear weapons. Sorry, no death stars. But that did not stop some nations from bringing weapons of lesser destruction into orbit. Russian cosmonauts regularly bring a handgun up with them. The Russian space station Salyut 3 was fitted with a 23mm cannon. There has also been talk of more insidious weapons systems, both overtly and covertly, but we must not be distracted from the topic at hand.

Perhaps the most important values articulated by the treaty are also the least likely to withstand the test of time. The treaty declares pretty much every natural resource outside the bounds of Earth to be the "common heritage of mankind." Article II specifically bans occupations and claims of sovereignty. The only things that can be owned in space are the man made objects that we put up there. Let's be honest: in the grand scheme of things, is that really going to pan out? As much as I admire the drafters for starting us all off on the right foot, I cannot help but be skeptical that the limited natural resources on Earth will satisfy the nations of the globe when every time they look through their telescopes all they see is an abundance of hydrocarbons, ice, diamonds (yes, diamonds), metals, and other sources of energy and industry.

It is against the backdrop of the Outer Space Treaty that we move on in our thought experiment that is Galactic Laws, but we must not forget the inability of dignity and fairness to keep at bay man's thirst for natural resources. As a whole, the dominant animal on planet Earth has spent a great deal of its time consuming things and fighting over who should get to consume them. As much as I hate to admit it, I do not think this is going to end in the final frontier. Countries have long been pushing the envelope with regards to the Treaty, including shooting down satellites from earth, planting a flag on the Moon, and who can forget Ronald Regan's Strategic Defense Initiative, AKA Project Star Wars. So although we must begin with the Outer Space Treaty, we must acknowledge its limitations for governing the future of space exploration.

An Introduction

I began this blog to develop some thoughts that I have had regarding the implications of current legal theories when extended to the realm of outer space. As the name of the blog suggests, I believe that like the bygone era of the Wild West, outer space will one day be brought within the jurisdiction of man and his laws. Or perhaps it would be more appropriate to say that the momentum of man towards the far reaches of the solar system and beyond will one day allow us to enforce our own brand of justice on all operate in our sphere of influence. This expansion of our own jurisdiction will require development of the laws and precedents that exist in our current legal systems to meet the unique conditions of outer space.

I have always been interested in outer space, but the special legal implications have captivated me lately as I have entered into my second year of law school. Don't misunderstand me: so far I don't think any of my professors would want to float anywhere near these topics in a serious class discussion. But part of the beauty of out particular place in history is that these subjects are largely the territory of the dreamer, the nerd, and perhaps a neurotic legal scholar or two.

I intend to begin by exploring the current laws and treaties that govern man's use of the area surrounding the Earth and the Moon. Once we (yes, I am hoping that at least one other person will read this) once WE have a firm footing in terms of the current laws, I will take a law-school approach to Galactic Law. We will begin with the extension of current property law principles into the realm of outer space. We will similarly bring in torts, contracts, criminal law, and, possibly, constitutional law. Can you own a piece of three-dimensional space if the space itself is technically expanding with every passing second? How can you have a meeting of the minds over several light years when the transfer of information is limited by the speed of light and can take months or years to reach the other person? These are the types of questions I hope to explore in this blog in the coming months.