The New Palgrave Dictionary of Economics and the Law; Macmillan Press, London.
18 Pages Posted: 15 May 1998
Contractual obligations provide commitment. By limiting opportunism, they promote valuable relation-specific effort and investment. This entry explores which breach remedies parties will want to combine with simple noncontingent contracts, and how the desirable remedy varies with circumstance. In the course of this discussion, the entry considers recent work that unsettles some long-standing conclusions of the law and economics literature. Largely, the entry follows the law and economics literature by considering several standard breach remedies in an abstract and idealized form. In the case of expectation damages, it also explores how the typical formalization differs from common ways that the remedy is implemented. The entry considers both efficient breach and efficient reliance decisions.
JEL Classification: D81, D82
Suggested Citation: Suggested Citation