Courts Should Not Enforce Government Contracts

41 Pages Posted: 28 Aug 2001

See all articles by Eric A. Posner

Eric A. Posner

University of Chicago - Law School

Date Written: August 2001

Abstract

Most scholars believe that courts should enforce government contracts, though they disagree about the extent to which liability or damages rules should trade off relevant considerations - the problem of governments holding up contractors, on the one hand, and the problem of governments using contracts in order to defer costs to future governments, on the other hand. These scholars, however, overestimate the ability of courts to affect policy outcomes. Courts cannot increase the welfare of current or future generations by enforcing government contracts. The reason is that enforcing contracts can benefit future generations only by increasing the credibility of their governments, but if the current government has not already tried to benefit future generations by complying with contracts voluntarily, then it will offset the effect of an adverse judgment by withdrawing value from the future using a policy instrument over which courts have no control.

Keywords: Government contracts

JEL Classification: K0

Suggested Citation

Posner, Eric A., Courts Should Not Enforce Government Contracts (August 2001). U Chicago Law & Economics, Olin Working Paper No. 132. Available at SSRN: https://ssrn.com/abstract=281436 or http://dx.doi.org/10.2139/ssrn.281436

Eric A. Posner (Contact Author)

University of Chicago - Law School ( email )

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HOME PAGE: http://www.law.uchicago.edu/faculty/posner-e/

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