Book contents
- Frontmatter
- Contents
- Preface
- Readings in the economics of contract law
- Part I Some preliminaries
- 1.1 Non-contractual relations in business: a preliminary study
- 1.2 Relational exchange: economics and complex contracts
- 1.3 Production functions, transactions costs, and the new institutionalism
- 1.4 The market for “lemons”: quality uncertainty and the market mechanism
- 1.5 A treatise on the law of marine insurance and general average, volume I
- 1.6 The economics of moral hazard: comment
- 1.7 The economics of moral hazard: further comment
- 1.8 Efficient rent seeking
- Questions and notes on rent seeking
- Part II Contract law and the least cost avoider
- Part III The expectation interest, the reliance interest, and consequential damages
- Part IV The lost-volume seller puzzle
- Part V Specific performance and the cost of completion
- Part VI Power, governance, and the penalty clause puzzle
- Part VII Standard forms and warranties
- Part VIII Duress, preexisting duty, and good faith modification
- Part IX Impossibility, related doctrines, and price adjustment
- Questions and notes on impossibility and price adjustment
- References
- Index of cases
- Author index
- Subject index
1.1 - Non-contractual relations in business: a preliminary study
Published online by Cambridge University Press: 10 November 2010
- Frontmatter
- Contents
- Preface
- Readings in the economics of contract law
- Part I Some preliminaries
- 1.1 Non-contractual relations in business: a preliminary study
- 1.2 Relational exchange: economics and complex contracts
- 1.3 Production functions, transactions costs, and the new institutionalism
- 1.4 The market for “lemons”: quality uncertainty and the market mechanism
- 1.5 A treatise on the law of marine insurance and general average, volume I
- 1.6 The economics of moral hazard: comment
- 1.7 The economics of moral hazard: further comment
- 1.8 Efficient rent seeking
- Questions and notes on rent seeking
- Part II Contract law and the least cost avoider
- Part III The expectation interest, the reliance interest, and consequential damages
- Part IV The lost-volume seller puzzle
- Part V Specific performance and the cost of completion
- Part VI Power, governance, and the penalty clause puzzle
- Part VII Standard forms and warranties
- Part VIII Duress, preexisting duty, and good faith modification
- Part IX Impossibility, related doctrines, and price adjustment
- Questions and notes on impossibility and price adjustment
- References
- Index of cases
- Author index
- Subject index
Summary
Most larger companies, and many smaller ones, attempt to plan carefully and completely. Important transactions not in the ordinary course of business are handled by a detailed contract. For example, recently the Empire State Building was sold for $65 million. More than 100 attorneys, representing thirty-four parties, produced a 400-page contract. Another example is found in the agreement of a major rubber company in the United States to give technical assistance to a Japanese firm. Several million dollars were involved and the contract consisted of eighty-eight provisions on seventeen pages. The twelve house counsel – lawyers who work for one corporation rather than many clients – interviewed said that all but the smallest businesses carefully planned most transactions of any significance. Corporations have procedures so that particular types of exchanges will be reviewed by their legal and financial departments.
More routine transactions commonly are handled by what can be called standardized planning. A firm will have a set of terms and conditions for purchases, sales, or both printed on the business documents used in these exchanges. Thus the things to be sold and the price may be planned particularly for each transaction, but standard provisions will further elaborate the performances and cover the other subjects of planning. Typically, these terms and conditions are lengthy and printed in small type on the back of the forms. For example, twenty-four paragraphs in eight-point type are printed on the back of the purchase order form used by the Allis Chalmers Manufacturing Company.
- Type
- Chapter
- Information
- Readings in the Economics of Contract Law , pp. 4 - 15Publisher: Cambridge University PressPrint publication year: 1982
- 1
- Cited by