Remedies On and Off Contract

38 Pages Posted: 21 Apr 2010 Last revised: 30 Apr 2012

See all articles by Richard R. W. Brooks

Richard R. W. Brooks

New York University School of Law; Yale University - Law School

Alexander Stremitzer

ETH Zurich

Date Written: April 19, 2010

Abstract

Easy availability of rescission followed by restitution has, for centuries, unsettled legal authorities, who fear it as a threat to commercial order or other normative values. Responding to these fears, authorities have limited the ease with which rescission may be elected. Their approach is often excessive and based on misunderstandings of the remedy’s effects. Rescission followed by restitution may in fact promote contracting by allowing parties to create efficient incentives. Concern about the stability of contracting is not entirely unfounded, but the problem is not primarily due to the ease with which promisees are able to rescind following breach, rather it is the remedy that follows rescission. This essay presents an argument for liberal rescission followed by limited ensuing remedies. Modern reforms and reform proposals seem to embrace the opposite route of restricting access to rescission while at times allowing for generous ensuing remedies. Ironically, these proposals, as demonstrated in the essay, pose the real threat to contractual stability.

Keywords: contracts, rescission, aedilitian remedies

JEL Classification: K12

Suggested Citation

Brooks, Richard R. W. and Stremitzer, Alexander, Remedies On and Off Contract (April 19, 2010). Yale Law Journal, Vol. 120, p. 690, 2011; Yale Law & Economics Research Paper No. 406. Available at SSRN: https://ssrn.com/abstract=1592745

Richard R. W. Brooks

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212.998.6619 (Phone)

HOME PAGE: https://its.law.nyu.edu/facultyprofiles/index.cfm?fuseaction=profile.overview&personid=43731

Yale University - Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States

Alexander Stremitzer (Contact Author)

ETH Zurich ( email )

Haldeneggsteig 4
Zurich, 8092
Switzerland
+41 (44) 632 40 08 (Phone)

HOME PAGE: http://www.lawecon.ethz.ch/people/stremitzer.html

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