Beyond Ex Post Expediency - An Ex Ante View of Rescission and Restitution
Richard R. W. Brooks
Yale University - Law School
UCLA School of Law
December 23, 2011
Washington and Lee Law Review, Vol. 68, No. 3, p. 1171, 2011
Yale Law & Economics Research Paper 443
UCLA School of Law, Law-Econ Research Paper 12-04
It is commonly held that if getting a contractual remedy was costless and fully compensatory, rescission followed by restitution would not exist as a remedy for breach of contract. This claim, we will demonstrate, is not correct. Rescission and restitution offer more than remedial convenience. Rational parties, we argue, would often desire a right of rescission followed by restitution even if damages were fully compensatory and costless to enforce. The mere presence of a threat to rescind, even if not carried out, exerts an effect on the behavior of parties. Parties can enlist this effect to increase the value of contracting.
Number of Pages in PDF File: 15
Keywords: contracts, rescission, rejection, restitution, optional remedies
JEL Classification: K12
Date posted: December 25, 2011 ; Last revised: February 18, 2012
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