Virtual worlds have seized the imaginations of millions of people who now live, work, and play together in these new environments. But all is not well. These online communities are ruled nearly exclusively by contract law, through end-user licence agreements, terms of service, and codes of conduct. Contracts are a critical means of helping two (or a few) people negotiate their preferences. But online communities are made up of enormous and shifting populations that have no time or ability to negotiate agreements with every other community member. Relying on contracts alone thus threatens the investments and creativity that go into these communities.

This article seeks to demonstrate that contracts cannot, by their very nature, provide for all the legal needs of online communities. Public law needs to be developed to allow these communities to thrive. The author argues that common law, rather than legislation, can be most effective in this task. Courts can draw on existing and familiar areas of common law to provide the private-property, dignitary and personal protections these communities need according to the specific behavioural norms their creators and users have fostered. The common law method, being iterative, incremental, and experimental, is well suited to modifying these areas where needed. It allows for the more immediate resolution of problems while also being sufficiently flexible to permit rules to be expanded or contained as required.