  We present first principles density functional calculations and downfolding
studies of the electronic and magnetic properties of the layered quantum spin
system
  TiOCl. We discuss explicitely the nature of the exchange pathes and attempt
to clarify the concept of orbital ordering in this material. An analysis of the
electronic structure of slightly distorted structures according to the phononic
modes allowed in this material suggests that this system is subject to large
orbital fluctuations driven by the electron-phonon coupling. Based on these
results, we propose a microscopic explanation of the behavior of TiOCl near the
phase transition to a spin-gapped system.
