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Thus far what weve done is to talk about how it is that contracts produce gains from trade to the parties, positive externalities. The benefits are not just between the two parties, they also radiate out to the rest of the legal system. The more difficult case has to deal with the problem of negative externalities. If it turns out that it is wrong for A to hit B or for C to hit B or then if it turns out that A and C get together, its a situation in which the synergies between A and C essentially make the likelihood of force against the third person more likely, so the legal response is to render these contracts unenforceable in an effort to dissipate the gains and in fact, in many cases you not only render them unenforceable, you make them conspiracies and essentially you can then punish them under the criminal law because the gains to the two parties are inversely correlated with social welfare given the huge losses that are suffered by victims of force and fraud. In the simplest c
