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Incomplete Contracts And The Theory Of Contract Design, Robert E. Scott, George G. Triantis
Incomplete Contracts And The Theory Of Contract Design, Robert E. Scott, George G. Triantis
Faculty Scholarship
We are delighted to accept this invitation to write a short essay on the economic theory of incomplete contracts and to illuminate its current and potential impact on the legal analysis of contracts and contract law. Economic contract theory has made significant inroads in legal scholarship over the past fifteen years, and this is a good time to take stock of its strengths and weaknesses. Several recent publications in the Yale Law Journal have offered evaluations of the contributions of contract theory.' In this essay, we offer our opinion as to its future path in legal scholarship. In particular, we …
Anticipating Litigation In Contract Design, Robert E. Scott, George G. Triantis
Anticipating Litigation In Contract Design, Robert E. Scott, George G. Triantis
Faculty Scholarship
Contract theory does not address the question of how parties design contracts under the existing adversarial system, which relies on the parties to establish relevant facts indirectly by the use of evidentiary proxies. In this Article, we advance a theory of contract design in a world of costly litigation. We examine the efficiency of investment at the front end and back end of the contracting process, where we focus on litigation as the back-end stage. In deciding whether to express their obligations in precise or vague terms, contracting parties implicitly allocate costs between the front and back end. When the …