Enforcing Bilateral Promises: A Comparative Law and Economics Perspective
University of Minnesota - Law School; University of Bologna
University of Milan - Faculty of Law
Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics; University of St. Thomas School of Law
January 9, 2012
Minnesota Legal Studies Research Paper No. 12-03
Parties often exchange promises of future performance with one another. Legal systems frame and regulate contracts involving the exchange of bilateral promises of future performance differently from one another. Two conceptual and practical questions often arise in these bilateral situations. Should a breaching promisor be allowed to force the performance of his non-breaching promisee? Should a breaching party be able to collect damages in a contract if his counterpart was also in breach? This paper examines these interrelated questions from a comparative law and economics perspective. We consider contracts in which parties make reciprocal promises of performance and study the incentives created by applying a defense of non-performance in unilateral breach cases and the “plaintiff in default” preclusion rules in bilateral breach cases.
Number of Pages in PDF File: 29
Keywords: Bilateral Contracts, Reliance, Remedies for Breach, Defense of Non-Performance, Plaintiff in Default, Preclusion Rules
JEL Classification: K12, K41
Date posted: January 9, 2012
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