IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwple/9506002.html
   My bibliography  Save this paper

``The Economics of Agency Law and Contract Formation''

Author

Listed:
  • Eric Rasmusen

    (Indiana University School of Business)

  • .

Abstract

This article addresses issues that arise in agency law when agents make contracts on behalf of principals. The main issue is whether the principal should be bound when the agent makes a contract with some third party on his behalf which the principal would immediately wish to disavow. The resulting tradeoffs resemble those in tort law, so the least-cost-avoider principle is useful for deciding when contracts are valid and may be the underlying logic behind a number of different legal doctrines applied to agency cases. In particular, an efficiency explanation can be found for the undisclosed principal rule, which says that the principal is generally bound even when the third party is unaware that the agent is acting as an agent for him.

Suggested Citation

  • Eric Rasmusen & ., 1995. "``The Economics of Agency Law and Contract Formation''," Law and Economics 9506002, EconWPA.
  • Handle: RePEc:wpa:wuwple:9506002
    Note: An 82KB LaTeX file. A postscript file is available on request from Erasmuse@Indiana.edu.
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/9506/9506002.pdf
    Download Restriction: no

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/9506/9506002.tex
    Download Restriction: no

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/9506/9506002.ps.gz
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    2. Kathryn E. Spier, 1992. "Incomplete Contracts and Signalling," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 432-443, Autumn.
    3. Rasmusen, Eric & Ayres, Ian, 1993. "Mutual and Unilateral Mistake in Contract Law," The Journal of Legal Studies, University of Chicago Press, vol. 22(2), pages 309-343, June.
    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. Caspar Rose, 2010. "The transfer of property rights by theft: an economic analysis," European Journal of Law and Economics, Springer, vol. 30(3), pages 247-266, December.
    2. Alan M. Taylor, 2002. "A Century Of Purchasing-Power Parity," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 139-150, February.
    3. Raul Green & Michel Hy, 2002. "Internet et chaînes d'approvisionnement agro-alimentaire," Économie rurale, Programme National Persée, vol. 272(1), pages 14-27.
    4. Philip L. Williams & Graeme Woodbridge, 2004. "Antitrust Merger Policy: Lessons from the Australian Experience," NBER Chapters,in: Governance, Regulation, and Privatization in the Asia-Pacific Region, NBER East Asia Seminar on Economics, Volume 12, pages 35-72 National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • K - Law and Economics

    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:wpa:wuwple:9506002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.