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Litigation And The Optimal Combination Of Vague And Precise Clauses In Contracts, Alvaro E. Bustos
Litigation And The Optimal Combination Of Vague And Precise Clauses In Contracts, Alvaro E. Bustos
Faculty Working Papers
In this paper we determine the optimal combination of precise and vague clauses written in contracts when the parties face writing and enforcement costs, the second ones in the form of litigation. We show that the parties may prefer to write vague instead of precise clauses not only because they are cheaper to write but also because they are cheaper to enforce. We extend Battigalli and Maggi (2002) to model the decision of a principal who chooses clauses to describe the actions that an agent has to perform. As both players observe nature imperfectly they may call for a court …
A New (And Better) Interpretation Of Holmes's Prediction Theory Of Law, Anthony D'Amato
A New (And Better) Interpretation Of Holmes's Prediction Theory Of Law, Anthony D'Amato
Faculty Working Papers
Holmes's famous 1897 theory that law is a prediction of what courts will do in fact slowly changed the way law schools taught law until, by the mid-1920s legal realism took over the curriculum. The legal realists argued that judges decide cases on all kinds of objective and subjective reasons including precedents. If law schools wanted to train future lawyers to be effective, they should be exposed to collateral subjects that might influence judges: law and society, law and literature, and so forth. But the standard interpretation has been a huge mistake. It treats law as analogous to weather forecasting: …