Abstract

http://ssrn.com/abstract=845108
 
 

Citations (10)



 
 

Footnotes (15)



 


 



One-Sided Contracts in Competitive Consumer Markets


Lucian A. Bebchuk


Harvard Law School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)

Richard A. Posner


University of Chicago Law School; National Bureau of Economic Research (NBER)


Michigan Law Review, Vol. 104, pp. 827-836, 2006
Harvard Law and Economics Discussion Paper No. 534

Abstract:     
This paper shows that "one-sided" terms in standard contracts, which deny consumers a contractual benefit that seems efficient on average, may arise in competitive markets without informational problems (other than those of courts). A one-sided term might be an efficient response to situations in which courts cannot perfectly observe all the contingencies needed for an accurate implementation of a "balanced" contractual term when firms are more concerned about their reputation, and thus less inclined to behave opportunistically, than consumers are. We develop this explanation, discuss its positive and normative implications, and compare them to those of information-based explanations for one-sided terms.

Number of Pages in PDF File: 13

Keywords: contracts, standard form contracts, contracts of adhesion, reputation, opportunism, observability

JEL Classification: D8, K12

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Date posted: November 10, 2005 ; Last revised: April 29, 2009

Suggested Citation

Bebchuk, Lucian A. and Posner, Richard A., One-Sided Contracts in Competitive Consumer Markets. Michigan Law Review, Vol. 104, pp. 827-836, 2006; Harvard Law and Economics Discussion Paper No. 534. Available at SSRN: http://ssrn.com/abstract=845108

Contact Information

Lucian A. Bebchuk (Contact Author)
Harvard Law School ( email )
Cambridge, MA 02138
United States
617-495-3138 (Phone)
617-812-0554 (Fax)
HOME PAGE: http://www.law.harvard.edu/faculty/bebchuk/
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)
Richard A. Posner
University of Chicago Law School ( email )
1111 E. 60th St.
LBQ 611
Chicago, IL 60637
United States
773-702-9608 (Phone)
773-702-0730 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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