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Efficient Reliance and Contract Remedies

Rogerson, William P. (1980) Efficient Reliance and Contract Remedies. Social Science Working Paper, 340. California Institute of Technology , Pasadena, CA. (Unpublished)

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Parties to a contract often must engage in expenditures prior to the performance of the contract to either prepare for or make use of the performance of the contract. Legal institutions provide for contract enforcement either by specifically enforcing contractually specified actions or by requiring that the breacher pay the breachee an amount of money called damages. This paper analyzes the impact of varying the enforcement institution on the incentives to rely. An unambiguous ranking of specific performance and five damage measures are obtained in terms of efficiency of the reliance decision.

Item Type:Report or Paper (Working Paper)
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URLURL TypeDescription ItemPublished Article
Alternate Title:Efficient Reliance and Damage Measures for Breach of Contract
Additional Information:I would like to thank Robert Bates, Roger Noll, Alan Schwartz, Steven Shavell, and Louis Wilde for extremely helpful comments and discussions. This paper benefited immensely from job seminars at a number of universities. It was written while I was supported by a Canada Council Doctoral Fellowship. Published in The RAND Journal of Economics, Vol. 15, #1 (Spring, 1984) pp. 39-53
Group:Social Science Working Papers
Funding AgencyGrant Number
Canada Council Doctoral FellowshipUNSPECIFIED
Subject Keywords:Contracts, Specific performance, Contract negotiations, Capital costs, Production efficiency, Sellers surplus, Efficiency metrics, Contract breaches, Expected returns, Scrap value
Series Name:Social Science Working Paper
Issue or Number:340
Record Number:CaltechAUTHORS:20171009-151913440
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82232
Deposited By: Jacquelyn Bussone
Deposited On:09 Oct 2017 22:50
Last Modified:03 Oct 2019 18:52

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