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Contract Law

In: Handbook of Law and Economics

Author

Listed:
  • Hermalin, Benjamin E.
  • Katz, Avery W.
  • Craswell, Richard

Abstract

This chapter 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 main topics that correspond to the major doctrinal divisions of the law of contracts. These divisions include freedom of contract (the extent of private power to create binding obligations), formation of contracts (the procedural mechanics of exchange, and the rules that govern pre-contractual behavior), contract interpretation (the consequences that follow when agreements are ambiguous or incomplete), and enforcement of contractual obligations (the choice between private and public enforcement, and the legal remedies that follow from breach of contract). In each of these sections, we provide an economic analysis of relevant legal rules and institutions, and of the connections between legal arrangements and corresponding topics in microeconomic theory, such as welfare economics and the theory of contracts.

Suggested Citation

  • Hermalin, Benjamin E. & Katz, Avery W. & Craswell, Richard, 2007. "Contract Law," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 1, chapter 1, pages 3-138, Elsevier.
    • Handle: RePEc:eee:lawchp:1-01
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    Citations

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    Cited by:

    1. Ola Kvaløy & Trond E. Olsen, 2009. "Endogenous Verifiability and Relational Contracting," American Economic Review, American Economic Association, vol. 99(5), pages 2193-2208, December.
    2. Kolotilin, Anton & Li, Hao & Li, Wei, 2013. "Optimal limited authority for principal," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2344-2382.
    3. De Manuel, Mirzha & Valiante, Diego, 2014. "A Life Cycle Approach to Investor Protection," ECMI Papers 9619, Centre for European Policy Studies.
    4. Lissoni, Francesco & Montobbio, Fabio & Zirulia, Lorenzo, 2013. "Inventorship and authorship as attribution rights: An enquiry into the economics of scientific credit," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 49-69.
    5. Bernhard Ganglmair, 2008. "Breakup of Repeat Transaction Contracts, Specific Investment, and Efficient Rent-Seeking," JEPS Working Papers 08-001, JEPS.
    6. D׳Agostino, Elena & Seidmann, Daniel J., 2016. "Protecting buyers from fine print," European Economic Review, Elsevier, vol. 89(C), pages 42-54.

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