First, since it is imperative to permit free contract, paternalistic legislation or administrative regulation is disfavored and judicial refusal to enforce contracts that are substantively unfair is frowned upon. Second, it is also understood that in many cases, high transaction costs may block contracting when there are too many parties to negotiate. For example, all the parties affected by air pollution could not contract with a polluter to alter his behavior. The job of the legal regime in such cases is either to pick rules that facilitate contracting or to assign the right to the party who would have purchased it, had bargaining been plausible. In the world of the new law and economics scholarship, covenants ought to be enforced against a promisor's successor if and only if the promisee would in fact negotiate the covenant with the promisor's successor, were it not for the transaction costs of locating and reaching agreement with him.
Parties have absolute rights to enjoy the fruits of their labor and to engage in voluntary exchange.
Relationships with strangers are governed by the principle that one must compensate those to whom one causes harm. His demands that parties assess the justice of legal claims behind a veil of ignorance, that is without any knowledge which would enable them to know whether a particular rule would benefit or harm them, has been useful in analyzing a variety of legal issues. The procedure has appealed to legal scholars as more scientific and neutral than simply balancing the series of personal, overtly political reactions one has to any set of rules. While the law and economics and philosophical approaches have been welcomed by legal academics who worried, after the demise of conceptualism, that they could offer no compelling advice to those in power, the internal intellectual coherence of each of these new movements is open to criticism. The appeal of libertarianism depends on making a morally coherent case for some initial natural right to one's marginal product, a task that has never been performed satisfactorily though it has been attempted regularly since Locke's Second Treatise .