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Fairness In Contractual Relations: An Economic-Oriented Understanding Of Good Faith Performance, Luigi Russi
Fairness In Contractual Relations: An Economic-Oriented Understanding Of Good Faith Performance, Luigi Russi
Luigi Russi
This is a derivative version of 'Can Good Faith Performance Be Unfair? An Economic Framework for Understanding the Problem', which appeared in the Whittier Law Review, vol. 29, 2008. In comparison to the version therein published, I have eliminated the mathematical appendix, and attempted to outline my reasoning exclusively in words, for it to be accessible to a wider readership.
Can Good Faith Performance Be Unfair? An Economic Framework For Understanding The Problem, Luigi Russi
Can Good Faith Performance Be Unfair? An Economic Framework For Understanding The Problem, Luigi Russi
Luigi Russi
The paper deals with the duty of good faith in contract performance, as set out in the U.C.C. In particular, it focuses on the different theories as to its practical meaning, by distinguishing between two types of standards: behavioral and economic ones. The latter are further framed after the Learned Hand formula of negligence, as adapted to contractual relationships by relevant literature. By analyzing the functioning of economic standards in presence of transaction costs, it is then concluded that economic standards are only weakly preferable to behavioral ones which, under certain conditions, may prove as useful in providing a practical …