Beyond Ex Post Expediency - An Ex Ante View of Rescission and Restitution

15 Pages Posted: 25 Dec 2011 Last revised: 18 Feb 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: December 23, 2011

Abstract

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.

Keywords: contracts, rescission, rejection, restitution, optional remedies

JEL Classification: K12

Suggested Citation

Brooks, Richard R. W. and Stremitzer, Alexander, Beyond Ex Post Expediency - An Ex Ante View of Rescission and Restitution (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. Available at SSRN: https://ssrn.com/abstract=1976435

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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