IDEAS home Printed from https://ideas.repec.org/a/ucp/jlstud/doi10.1086-658403.html
   My bibliography  Save this article

The Right to Withdraw in Contract Law

Author

Listed:
  • Omri Ben-Shahar
  • Eric A. Posner

Abstract

European law gives consumers the right to withdraw from a range of contracts for goods and services; American law, with narrow exceptions, does not. Yet merchants in the United States frequently provide by contract that consumers have the right to return goods. We analyze the right to withdraw in a model that incorporates a trade-off between allowing consumers to learn about goods that they purchase and protecting sellers from the depreciation of those goods. The right to withdraw--at least, as a default rule--has a plausible economic basis. We identify a nascent version of it in the well-known, controversial case of ProCD v. Zeidenberg.

Suggested Citation

  • Omri Ben-Shahar & Eric A. Posner, 2011. "The Right to Withdraw in Contract Law," The Journal of Legal Studies, University of Chicago Press, vol. 40(1), pages 115-148.
  • Handle: RePEc:ucp:jlstud:doi:10.1086/658403
    DOI: 10.1086/658403
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/658403
    Download Restriction: Access to the online full text or PDF requires a subscription.

    File URL: http://dx.doi.org/10.1086/658403
    Download Restriction: Access to the online full text or PDF requires a subscription.

    File URL: https://libkey.io/10.1086/658403?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Robert Scott & George Triantis, "undated". "Embedded Options and the Case Against Compensation in Contract Law," University of Virginia John M. Olin Program for Law & Economics Working Paper Series uvalwps-1013, University of Virginia School of Law.
    2. Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 48(Jun).
    3. Craswell, Richard, 1988. "Precontractual Investigation as an Optimal Precaution Problem," The Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 401-436, June.
    4. Richard H. Thaler & Cass R. Sunstein, 2023. "Libertarian paternalism," Chapters, in: Cass R. Sunstein & Lucia A. Reisch (ed.), Research Handbook on Nudges and Society, chapter 1, pages 10-16, Edward Elgar Publishing.
    5. Aghion, Philippe & Hermalin, Benjamin, 1990. "Legal Restrictions on Private Contracts Can Enhance Efficiency," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 381-409, Fall.
    6. Steven A. Matthews & Nicola Persico, 2005. "Information Acquisition and the Excess Refund Puzzle," PIER Working Paper Archive 05-015, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    7. Beales, Howard & Craswell, Richard & Salop, Steven C, 1981. "The Efficient Regulation of Consumer Information," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 491-539, December.
    8. Alexander Stremitzer, 2012. "Opportunistic Termination," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 28(3), pages 381-406, August.
    9. Aghion, Philippe & Hermalin, Benjamin, 1990. "Why Legal Restrictions on Private Contracts Can Enhance Efficiency," Department of Economics, Working Paper Series qt4j76f10g, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    10. Steven Shavell, 1980. "Damage Measures for Breach of Contract," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 466-490, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Keith N. Hylton, 2012. "The Economics of Necessity," The Journal of Legal Studies, University of Chicago Press, vol. 41(2), pages 269-289.
    2. Karampatzos Antonios & Ilić Nikola, 2023. "Law and Economics of the Withdrawal Right in EU Consumer Law," Review of Law & Economics, De Gruyter, vol. 19(3), pages 435-452, November.
    3. Sophie Bienenstock, 2016. "Consumer education: why the market doesn’t work," European Journal of Law and Economics, Springer, vol. 42(2), pages 237-262, October.
    4. Difrancesco, Rita Maria & Huchzermeier, Arnd & Schröder, David, 2018. "Optimizing the return window for online fashion retailers with closed-loop refurbishment," Omega, Elsevier, vol. 78(C), pages 205-221.
    5. Courtenay Atwell, 2015. "The Franchisee as a Consumer: Determining the Optimal Duration of Pre-Contractual Disclosure," Journal of Consumer Policy, Springer, vol. 38(4), pages 457-489, December.
    6. Simone Ranftl & Brigitta Lurger & Hilmar Brohmer & Ursula Athenstaedt, 2022. "The Consumer Option Model for Withdrawal Rights in the EU: Analysis of an Alternative Design," American Journal of Trade and Policy, Asian Business Consortium, vol. 9(1), pages 23-42.
    7. Sven Hoeppner, 2014. "The unintended consequence of doorstep consumer protection: surprise, reciprocation, and consistency," European Journal of Law and Economics, Springer, vol. 38(2), pages 247-276, October.
    8. J. Luzak, 2014. "To Withdraw Or Not To Withdraw? Evaluation of the Mandatory Right of Withdrawal in Consumer Distance Selling Contracts Taking Into Account Its Behavioural Effects on Consumers," Journal of Consumer Policy, Springer, vol. 37(1), pages 91-111, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lewis A. Kornhauser & W. Bentley MacLeod, 2012. "Contracts between Legal Persons [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    2. Mehrdad Vahabi, 1999. "From Walrasian General Equilibrium to Incomplete Contracts: Making Sense of Institutions," Post-Print halshs-03704424, HAL.
    3. Comino, Stefano & Nicolò, Antonio & Tedeschi, Piero, 2010. "Termination clauses in partnerships," European Economic Review, Elsevier, vol. 54(5), pages 718-732, July.
    4. Christine Jolls & Cass R. Sunstein, 2006. "Debiasing through Law," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 199-242, January.
    5. Roman Inderst, 2008. "'Irresponsible Lending' With A Better Informed Lender," Economic Journal, Royal Economic Society, vol. 118(532), pages 1499-1519, October.
    6. Motta, Massimo & Fumagalli, Chiara & Rønde, Thomas, 2009. "Exclusive dealing: the interaction between foreclosure and investment promotion," CEPR Discussion Papers 7240, C.E.P.R. Discussion Papers.
    7. Bruce Lyons & Robert Sugden, 2021. "Transactional fairness and pricing practices in consumer markets," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2021-03, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    8. De Geest, Gerrit, 2013. "N problems require N instruments," International Review of Law and Economics, Elsevier, vol. 35(C), pages 42-57.
    9. J. Luzak, 2014. "To Withdraw Or Not To Withdraw? Evaluation of the Mandatory Right of Withdrawal in Consumer Distance Selling Contracts Taking Into Account Its Behavioural Effects on Consumers," Journal of Consumer Policy, Springer, vol. 37(1), pages 91-111, March.
    10. Joseph E. Stiglitz, 2017. "The overselling of globalization," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 52(3), pages 129-137, July.
    11. Ross Guest, 2010. "Policy Forum: Saving for Retirement: Policy Options to Increase Retirement Saving in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 293-301, September.
    12. Asen Ivanov, 2021. "Optimal pension plan default policies when employees are biased," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(3), pages 583-596, June.
    13. Schnellenbach, Jan, 2012. "Nudges and norms: On the political economy of soft paternalism," European Journal of Political Economy, Elsevier, vol. 28(2), pages 266-277.
    14. Uwe JIRJAHN & Stephen C. SMITH, 2018. "Nonunion Employee Representation: Theory And The German Experience With Mandated Works Councils," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 201-233, March.
    15. Uwe Jirjahn & Jens Mohrenweiser & Stephen C Smith, 2022. "Works councils and workplace health promotion in Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 43(3), pages 1059-1094, August.
    16. Ajla Cosic & Hana Cosic & Sebastian Ille, 2018. "Can nudges affect students' green behaviour? A field experiment," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 2(1), pages 107-111, March.
    17. Till Grüne-Yanoff, 2012. "Old wine in new casks: libertarian paternalism still violates liberal principles," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(4), pages 635-645, April.
    18. Christopher Jeffords, 2014. "Preference-directed regulation when ethical environmental policy choices are formed with limited information," Empirical Economics, Springer, vol. 46(2), pages 573-606, March.
    19. Markus Haavio & Kaisa Kotakorpi, 2012. "Sin Licenses Revisited," CESifo Working Paper Series 4010, CESifo.
    20. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:doi:10.1086/658403. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLS .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.