Rights Eroding by Past Breach
University of Chicago Law School
American Law and Economics Review, Vol. 1, 1999
There are many situations in which legal rights erode as a result of their past breach. A party may be unable to enforce an explicit legal entitlement--but only to the extent that she failed to enforce it in the past. When rights are being challenged repeatedly, anything less than rigorous enforcement by the rightholder may be translated by law into an implicit permission to continue these violations prospectively. The doctrines of course of performance in contract law and adverse possession in property law are prominent examples. This paper analyzes the effects of such laws on the value of entitlements. It confronts two conflicting intuitions. On the one hand, the "license" to commit prospective violations as a result of past breach may seem to diminish the value of the right. On the other hand, the fear of losing her right in this manner may reinforce the rightholder's motivation to protect her right, bolstering the credibility of her threat to sue against violations, thus better deterring violations. The paper proves and illustrates the perhaps surprising result, that these two conflicting effects always balance out. That is, erosion doctrines do not affect the value of the right. A rightholder will endure the same amount of violations, regardless of the law's willingness to alter rights and duties according to their past breach. In other words, in a fundamental way, erosion laws are neutral, irrelevant. The article demonstrates the applicability of this insight to various areas of law and its implications to traditional analyses of related doctrines.
An earlier version of this article was announced as University of Michigan Law School, Law and Economics Working Paper No. 99-002. The working paper can be downloaded from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=112888
Date posted: October 2, 1999