Abstract

http://ssrn.com/abstract=1505614
 
 

Footnotes (40)



 


 



Pre-Closing Liability


Omri Ben-Shahar


University of Chicago Law School

November 13, 2009

University of Chicago Law Review, Vol. 77, No. 4, 2010
U of Chicago Law & Economics, Olin Working Paper No. 498

Abstract:     
Two years after Penzoil v. Texaco threatened to burst the seam of contract formation and find binding commitments before negotiations ended, Judge Easterbrook stitched the rupture. His landmark decision in Empro v. Ball Co. held that a letter-of-intent, which is subject to the preparation of a more comprehensive formal document, is not binding. Each party can freely walk away from it prior to the closing, without incurring any liability and without the court scrutinizing the reasons for the negotiations breakdown. Many courts have since cited and followed Judge Easterbrook’s approach. In this commentary, I argue that that this freedom to walk away from negotiations is too broad and in conflict with the ex ante interests of the parties. Intermediate liability at the pre-closing stage would induce more efficient levels of precontractual reliance, benefiting both parties. I develop one possible foundation for an intermediate liability regime and demonstrate how it would apply in the case.

Number of Pages in PDF File: 19

working papers series


Download This Paper

Date posted: November 16, 2009 ; Last revised: February 25, 2013

Suggested Citation

Ben-Shahar, Omri, Pre-Closing Liability (November 13, 2009). University of Chicago Law Review, Vol. 77, No. 4, 2010; U of Chicago Law & Economics, Olin Working Paper No. 498. Available at SSRN: http://ssrn.com/abstract=1505614 or http://dx.doi.org/10.2139/ssrn.1505614

Contact Information

Omri Ben-Shahar (Contact Author)
University of Chicago Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,241
Downloads: 571
Download Rank: 24,256
Footnotes:  40

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.766 seconds