Final answer:
Property rights define the legal ownership and the rights to use property as one sees fit within legal bounds. Contractual rights, which are based on property rights, allow individuals to make agreements about the use of their property with legal enforcement. These concepts are essential for clear legal responsibility and economic transactions.
Step-by-step explanation:
According to the readings, the recognition of property rights does not necessarily equate to extensive rights on the use of tissue because property rights are legally defined as the rights of ownership but do not cover all aspects of use. The property right specifies what the owner can do within certain legal frameworks; however, it does not automatically grant the owner unlimited rights on how to use the tissue. As Coase's theory points out, clearly defining property rights is crucial in determining legal responsibilities and addressing issues such as externalities.
Contractual rights are based on property rights, and they allow individuals to enter into agreements with others regarding the use of their property while providing recourse through the legal system in the event of noncompliance. Without a legal system that enforces contracts, individuals may be reluctant to engage in transactions involving their property, which can hinder economic growth and transactions.