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The Law And Economics Of Contracts, Benjamin E. Hermalin, Avery W. Katz, Richard Craswell
The Law And Economics Of Contracts, Benjamin E. Hermalin, Avery W. Katz, Richard Craswell
Faculty Scholarship
This paper, which will appear as a chapter in the forthcoming Handbook of Law and Economics (A.M. Polinsky & S. Shavell, eds.), surveys major issues arising in the economic analysis of contract law. It begins with an introductory discussion of scope and methodology, and then addresses four topic areas that correspond to the major doctrinal divisions of the law of contracts. These areas include freedom of contract (i.e., the scope of private power to create binding obligations), formation of contracts (both the procedural mechanics of exchange, and rules that govern pre-contractual behavior), contract interpretation (what consequences follow when agreements are …
On The Stickiness Of Default Rules, Omri Ben-Shahar, John A. E. Pottow
On The Stickiness Of Default Rules, Omri Ben-Shahar, John A. E. Pottow
Articles
It was once perceived, and still is commonly taught, that default rules in contract law must mimic efficient arrangements. Otherwise, these rules impose needless transaction costs upon parties who seek to opt out of them to reach more efficient positions. In settings where these costs are high, parties might find themselves "stuck" in a default, unable to reach the outcome that they prefer. The strong version of this account-that the only factor that can make an inefficient default rule stick is the direct cost of drafting a tailored provision-has been gradually reappraised. It is by now recognized that factors beyond …