Evidentiary Arbitrage: The Fabrication of Evidence and the Verifiability of Contract Performance

34 Pages Posted: 15 Jul 2004  

Chris William Sanchirico

University of Pennsylvania Law School; University of Pennsylvania Wharton School - Business Economics and Public Policy Department

George G. Triantis

Stanford Law School

Multiple version iconThere are 2 versions of this paper

Date Written: May 2004

Abstract

Contract theory identifies verifiability as a critical determinant of the incompleteness of contracts. Although verifiability refers to the cost of proving relevant facts to a court, very little scholarship connects explicitly the evidentiary process to the drafting of substantive contract terms. This paper begins to explore this relationship to provide a more rigorous explanation of contract design. In particular, the paper concerns the very core of verifiability - truth-finding by a court - and examines the impact of the prospect of evidence fabrication on contracting. It thereby also explores the puzzling tolerance of the adjudicatory system for fabrication and the incentives to fabricate created by thresholds in burdens of proof. The paper suggests that, despite undermining truth-finding, evidence fabrication may be harnessed by contracting parties to improve the (evidentiary) cost-efficiency of performance incentives in their relationship.

Suggested Citation

Sanchirico, Chris William and Triantis, George G., Evidentiary Arbitrage: The Fabrication of Evidence and the Verifiability of Contract Performance (May 2004). U of Penn, Inst for Law & Econ Research Paper 04-10; Univ. of Virginia Law & Econ Research Paper No. 02-17. Available at SSRN: https://ssrn.com/abstract=353243 or http://dx.doi.org/10.2139/ssrn.353243

Chris William Sanchirico (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-4220 (Phone)

HOME PAGE: http://www.law.upenn.edu/faculty/csanchir/

University of Pennsylvania Wharton School - Business Economics and Public Policy Department

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

George G. Triantis

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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