The Transfer of Intangible Assets and Intangible Rights: Talmudic, Medieval post-Talmudic, and Islamic Legal Literatures

Abstract

This study explores how legal institutions have the potential to change economic development outcomes. Talmudic law ostensibly precludes the transfer (sale) of intangible assets and intangible rights thereby limiting an agricultural society’s ability to hedge risks and to raise financing. We argue that the Talmud itself found a fairly reasonable “rental contract” solution for enabling the transfer of intangible assets. We further maintain that the motivation for this solution arose out of economic pressure on rabbinical service providers by Jewish farmers in Roman-Palestine for whom Roman law arguably provided an alternative more sympathetic transfer model. The transfer of intangible rights proved to be a more difficult issue to resolve, however. Nevertheless, by the high and late middle ages, at least some post-Talmudic scholars suggested alternative mechanisms to effect the transfer of intangible assets/rights such as the Hitchayvut and the Situmta. The Situmta mechanism would have been particularly favorable to merchants involved in the transfer of intangibles on an ongoing basis. The relationship of these ideas to Islamic conceptions of intangibles, especially as it relates to Islamic commerce and commodity forward markets, is also explored.