The Role of Contractual Enforcement and Excuse in the Governance of Relational Agreements: An Economic Analysis
Global Jurist, Vol. 2, No. 2, 2002
44 Pages Posted: 16 Sep 2005
Most law and economics studies of contractual enforcement and excuse have focused on agreements in which the parties have fully specified their obligations with well-defined contract terms, and most have concluded that the excuse of contractual obligations will generally be inefficient. This essay focuses on the role of contractual enforcement and excuse in relational agreements - ones in which the parties ordinarily adapt their obligations to changed circumstances and unforeseen contingencies as they arise. The analysis implies that appropriate rules for the excuse of contractual obligations may increase the cooperativeness and longevity of a wide range of long-term business relationships.
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