In the movie, The Godfather, Michael Corleone relates to his sweetheart Kay Adams a story about his father:

MICHAEL: Well, when Johnny was first starting out, he was signed to a personal services contract with this big-band leader. And as his career got better and better, he wanted to get out of it. But the band leader wouldn’t let him. Now, Johnny is my father’s godson. So my father went to see this bandleader and offered him $10,000 to let Johnny go, but the bandleader said no. So the next day, my father went back, only this time with Luca Brasi. Within an hour, he had a signed release for a certified check of $1,000.

KAY: How did he do that?

MICHEAL: My father made him an offer he couldn’t refuse.

KAY: What was that?

MICHAEL: Luca Brasi held a gun to his head, and my father assured him that either his brains or his signature would be on the contract … That’s a true story.

Of course, we all recognize the pun – making “an offer he couldn’t refuse” ordinarily means an offer so good it can’t be passed up. In this case, it means literally an offer that cannot be refused because Luca Brasi will kill you.

An agreement made under duress is not an agreement at all. Like any other kind of aggressive action, it is what Mises categorized, for the purposes of praxeology, as autistic exchange:

Action always is essentially the exchange of one state of affairs for another state of affairs. If the action is performed by an individual without any reference to cooperation with other individuals, we may call it autistic exchange. An instance: the isolated hunter who kills an animal for his own consumption; he exchanges leisure and a cartridge for food.

…

Where there is no intentional mutuality, where an action is performed without any design of being benefitted by a concomitant action of other men, there is no interpersonal exchange, but autistic exchange. It does not matter whether the autistic action is beneficial or detrimental to other people or whether it does not concern them at all. A genius may perform his task for himself, not for the crowd; however, he is an outstanding benefactor of mankind. The robber kills the victim for his own advantage; the murdered man is by no means a partner in this crime, he is merely its object; what is done, is done against him.

Ludwig von Mises – Human Action, Chapter X.1

If you were to bring a contract to an arbitration hearing that had been signed under duress, the contract would be viewed as null and void because it had been signed under duress. It is not evidence of an agreement because no agreement was ever made or reached in the first place. All that occurred was an autistic exchange: one or more men acting irrespective of the participation of another.

One of the assumptions behind the idea that a lawful “slave contract” can exist is that a contract is “that which has been agreed to.” Thus, any intelligible agreement can be formed, and enforced, including an agreement to sell oneself into slavery, or to be murdered, or to be raped, and so on. Rothbard explains in Ethics of Liberty the current view of the law regarding what a contract is: “Why should this [contracted] payment now be enforceable at libertarian law? Existing law … largely contends that Jones must pay $1100 because he has ‘promised’ to pay, and that this promise set up in Smith’s mind the ‘expectation’ that he would receive the money.”

“But you promised” is an extremely useful device in the hands of the con artist. It is well-understood how the large crony-capitalist corporations, private cartels and monopolies benefit from State subsidy, lobbies and regulatory favors. These private microcosms of the coercive State order constantly utilize the “but you signed your name on the dotted-line” tactic. As an anecdotal example, the landlord of the apartments I live in once tried to tow my motorcycle for having expired tags. Their claim was that the expired tags proved I was “storing” the motorcycle on their property and the lease agreement I signed prohibits “vehicle-storage”. Of course, they did not think this up themselves; the tow company that contracts with the landlord sends patrol trucks to check for vehicles parked in no-parking zones – and, apparently, to scan for expired tags.

Stipulated settlements – a common situation in divorce – are another abuse of this concept. What was stipulated in the settlement is held “in perpetuity” until some new agreement is reached via the courts. Neither party is permitted to simply change their mind – after all, both parties “freely agreed and stipulated” the terms of the settlement to begin with.

Another legal corruption that is closely related to the perpetual agreement under duress is the confession. “You said you are guilty. You condemned yourself with your own mouth.” Coerced confession was famously used in the Inquisitions but its use has always been widespread and never more so than it is today. United States prosecutors had a 93% criminal conviction rate in 2010. Yet the vast majority of cases that the prosecutor takes up never even go to trial, instead being “plea-bargained” – a kind of confession. These are not unconnected facts – the overwhelming probability of conviction combined with the severity of the sentencing guidelines is one of the chief tools used by the prosecutor’s office to induce a plea-bargain. Stated differently, the prosecutor’s office makes threats to induce confessions; this is nothing else but forced confession.

Another example of the confession is your tax form: that instrument of oppression known as the Form 1040. Under US law, the argument for why you have to pay taxes is very convoluted – I suppose out of an attempt to avoid having to state in court the naked truth that you are obligated to pay taxes because the government can make you pay them (might makes right). In the US, if you ask why you must pay taxes, the government will respond that you have yourself already stated what taxes you owe the Federal government. You confessed it on your Form 1040: “I owe $X in taxes to the Federal government.” That’s the whole purpose of the form.

But if you ask why you must file a Form 1040, the government will ask you: Why should you be loath to report certain basic financial facts that the Congress – democratically elected representatives who speak for all Americans – has determined that all Americans should report? After all, you provide basic data in the census, you provide basic data for your driver’s license, you provide basic data for jury duty and the draft. Even the telephone company knows your phone number and the post office knows your home address. What, exactly, do you have to hide?

Do you see the trick? You have to file “basic information” about yourself and such a mild requirement could only be interpreted as oppressive by an anti-social personality. But in order to file this information with the government (on your 1040 Form), you must confess the amount of taxes you owe to the government. Should you later decide that you don’t owe any taxes (say, by not mailing in the check), the government will drag you to “tax court” and produce the Form 1040 against you as evidence – your signed confession that you owe taxes.

We all understand that an admission made under torture is invalid or an agreement made with a gun to the back of the head is invalid. In fact, people understood this in the medieval era, they were not stupid. Why else would the Inquisitions have needed to suggest that the victims who required torture methods suffered from madness or demon possession or were threatening society with heretical doctrines as excuses to explain the severity of the measures employed? Nevertheless, the coercive and really unlawful measures employed today – though much milder than outright torture and more subtle than a gun to the back of the head – are every bit as effective and have become so ingrained into the system, so deeply embedded into the culture that it is difficult to even conceive of an alternative.

Our idea of what constitutes valid consent – and the rights that are granted by the consenting party to the consented party – has been corrupted. Our idea of what counts as evidence of an agreement has been corrupted. Our idea of what counts as an admission of guilt has been corrupted. Our idea of what counts as proof of an unreliable witness (the “cross-examination”) is corrupted. Even our idea of what counts as a procedure for determining a just outcome of a dispute is corrupted. The adversarial court process is not just – it is a disguised form of trial-by-ordeal.

Genuine consent is consent given in the absence of coercion, extortion or any kind of duress. This is lawful consent. Consent given under coercion, extortion, and so on will not be acknowledged as valid by any competent arbitrator in an unhampered law market.

Genuine confession is a statement which is maintained in the face of its consequences. If you quote me, in arbitration, as having once said that “all apples are blue” and I respond that I have since changed my mind on the matter or that I was speaking poetically, then whatever I said in the past is no confession of anything. By quoting me, you may succeed in showing that I have been inconsistent or variable on the matter. But you may not hold me to my past words in the face of my own repudiation of my past words.

One of the primary uses of confession is to establish a person’s character based on his own assessments. If a person maintains an assertion about himself that is negative, then this is admissible as evidence against him. Or, if he maintains an assertion about his adversary that is positive, this is admissible as evidence in favor of his adversary. The converse situations are inadmissible. Your glowing reports of your own heroism are inadmissible. And so on. This is all common sense, of course, but outside of the trial-by-ordeal system operated by the government’s courts, it is of little consequence. Perry Mason tactics would be of only occasional use in arbitration hearings.

Genuine agreement is agreement that is still pertaining at the moment it is relied upon. This can be quickly confirmed by an arbitrator by simply asking both parties: “Do you agree to X?” If someone says “no”, then there is not agreement.

This is one and the same thing as asserting that mere promises cannot be held binding. Rothbard says,

Let us examine … the implications of the now prevalent “promise” or “expectations” theory of contracts. Suppose that A promises to marry B; B proceeds to make wedding plans, incurring costs of preparing for the wedding. At the last minute, A changes his or her mind, thereby violating this alleged “contract.” What should be the role of a legal enforcing agency in the libertarian society? Logically, the strict believer in the “promise” theory of contracts would have to reason as follows: A voluntarily promised B that he or she would marry the other, this set up the expectation of marriage in the other’s mind; therefore this contract must be enforced. A must be forced to marry B.

As far as we know, no one has pushed the promise theory this far. Compulsory marriage is such a clear and evident form of involuntary slavery that no theorist, let alone any libertarian, has pushed the logic to this point. Clearly, liberty and compulsory slavery are totally incompatible, indeed are diametric opposites. But why not, if all promises must be enforceable contracts?

A milder form of enforcing such marriage promises has, however, been employed, let alone advocated, in our legal system. The old “breach of promise” suit forced the violator of his promise to pay damages to the promisee, to pay the expenses undergone because of the expectations incurred. But while this does not go as far as compulsory slavery, it is equally invalid. For there can be no property in someone’s promises or expectations; these are only subjective states of mind, which do not involve transfer of title, and therefore do not involve implicit theft. They therefore should not be enforceable, and, in recent years, “breach of promise” suits, at least, have ceased to be upheld by the courts. The important point is that while enforcement of damages is scarcely as horrendous to the libertarian as compulsory enforcement of the promised service, it stems from the same invalid principle.

Let us pursue more deeply our argument that mere promises or expectations should not be enforceable. The basic reason is that the only valid transfer of title of ownership in the free society is the case where the property is, in fact and in the nature of man, alienable by man. All physical property owned by a person is alienable, i.e., in natural fact it can be given or transferred to the ownership and control of another party. I can give away or sell to another person my shoes, my house, my car, my money, etc. But there are certain vital things which, in natural fact and in the nature of man, are inalienable, i.e., they cannot in fact be alienated, even voluntarily. Specifically, a person cannot alienate his will, more particularly his control over his own mind and body. Each man has control over his own mind and body. Each man has control over his own will and person, and he is, if you wish, “stuck” with that inherent and inalienable ownership. Since his will and control over his own person are inalienable, then so also are his rights to control that person and will. That is the ground for the famous position of the Declaration of Independence that man’s natural rights are inalienable; that is, they cannot be surrendered, even if the person wishes to do so.

Murray Rothbard – Ethics of Liberty, Chapter 19

Unless mere promises can be made binding, then genuine agreement is nothing more or less than uncoerced agreement in the present. The “but you signed your name on the dotted line” argument holds no water in establishing genuine agreement. A past agreement that has been repudiated is no agreement at all. Rothbard clarifies this point further:

Obviously, if A says to B, “I hereby give you $10,000,” then title to the money has been transferred, and the gift is enforceable; A, furthermore, cannot later demand the money back as his right. On the other hand, if A says, “I promise to give you $10,000 in one year,” then this is a mere promise, what used to be called a nudum pactum in Roman law, and therefore is not properly enforceable. The receiver must take his chances that the donor will keep his promise. But if, on the contrary, A tells B: “I hereby agree to transfer $10,000 to you in one year’s time,” then this is a declared transfer of title at the future date, and should be enforceable.

It should be emphasized that this is not mere wordplay, much as it might seem so in particular cases. For the important question is always at stake: has title to alienable property been transferred, or has a mere promise been granted? In the former case, the agreement is enforceable because a failure to deliver the transferred property is theft; in the latter case, it is a mere promise which has not transferred title to property, a promise that may be morally binding, but cannot be legally binding on the promissor. Hobbes was not engaging in mere word-play when he correctly wrote:

Words alone, if they be of the time to come, and contain a bare promise [nudum pactum], are an insufficient sign of a free gift and therefore not obligatory. For if they be of the time to come, as tomorrow I will give, they are a sign I have not yet given, and consequently that my right is not transferred, but remaineth till I transfer it by some other act. But if the words be of the time present, or past, as, I have given, or do give to be delivered tomorrow, then this is my tomorrow’s right given away today. . . . There is a great difference in the signification of [the] words . . . between I will that this be thine tomorrow, and I will give it thee tomorrow: for the word I will, in the former manner of speech signifies a promise of an act of the will present; but in the latter, it signifies a promise of an act of the will to come: and therefore the former words, being of the present, transfer a future right; the latter, that be of the future, transfer nothing. (Thomas Hobbes, Leviathan, pt. 1, chap. 14 [italics Hobbes’s])

Murray Rothbard – Ethics of Liberty, Chapter 19

In an unhampered market in law, a past agreement or promise is merely that. The moment an agreement is renounced, it is no longer binding. Hence, promises or agreements are not a sure basis for contracts. Thus, mere promises cannot be the basis of a would-be slave contract, either. A device for making binding contracts, as Rothbard explains, is the performance bond which can be conceptually understood as a conditional transfer of title, consistent with Hobbes’ analysis quoted above.

Clayton –