In a free society, men are not forced to deal with one another. They do so only by voluntary agreement and, when a time element is involved, by contract. If a contract is broken by the arbitrary decision of one man, it may cause a disastrous financial injury to the other . . . . This leads to one of the most important and most complex functions of the government: to the function of an arbiter who settles disputes among men according to objective laws.
A unilateral breach of contract involves an indirect use of physical force: it consists, in essence, of one man receiving the material values, goods or services of another, then refusing to pay for them and thus keeping them by force (by mere physical possession), not by right—i.e., keeping them without the consent of the owner.
In a free society, the “rights” of any group are derived from the rights of its members through their voluntary, individual choice and contractual agreement, and are merely the application of these individual rights to a specific undertaking. Every legitimate group undertaking is based on the participants’ right of free association and free trade. (By “legitimate,” I mean: noncriminal and freely formed, that is, a group which no one was forced to join.)
For instance, the right of an industrial concern to engage in business is derived from the right of its owners to invest their money in a productive venture—from their right to hire employees—from the right of the employees to sell their services—from the right of all those involved to produce and to sell their products—from the right of the customers to buy (or not to buy) those products. Every link of this complex chain of contractual relationships rests on individual rights, individual choices, individual agreements. Every agreement is delimited, specified and subject to certain conditions, that is, dependent upon a mutual trade to mutual benefit.