Book Review

Abhishek Kumar Jain

abhishekjain.mgmt@gmail.com

Contract Law and Economics (Volume 6)

Edward Elgar Publishing, 11-Mar-2011 - 482 pages

This book is divided into 20 chapters which can be grouped in IV parts. Various authors who contributed in this book have tried to provide a comprehensive economic view on the different stages of Contract Law regime. Part I (Chapter 2-8) deals with the contract formation and interpretation. Chapter 2 emphasizes Precontractual Liability, which plays a significant role in the Contract Law machinery. This part has often been considered as non-problematic and gets neglected in the research work. The book states impact of law while sharing information, formulating strategy and arriving at a mutual consensus takes place. Chapter 3 takes an economic perspective to discuss, how resources are wasted due to mistakes and misrepresentation, while putting the contract on place. Also it provides formulas to evaluate the quantum of mistakes in various economic scenarios. Duress may become an excuse for non-performance, therefore it is important to understand the economic analysis of contractual duress. Chapter 4 focuses on distinctive features of the economic perspective on the duress doctrine. Under the contract law a promise must have reciprocal exchange; however, Gratuitous Promises makes a contrast statement. According to Law in some of the nation, such promises are not enforceable even if they are written on the paper or under seal because they go against the civil law system. Robert A. Prentice has discussed in Chapter 5 the economic point of view of this issue, where these promises are taken as gift giving. In Chapter 6 author has talked in detail about bequeathing and its forms in detail and also the effect of taxation policy on it. Standard form contracts is considered as a cost saving and efficient method, though it comes with certain limitations which have been recently explored in the literature. In chapter 7, Clayton P. Gillette has compiled those aspects by using behavioral models. Chapter 8 which is Interpretation and Implies Terms in Contract Law an essay by George M. Cohen has emphasized the issue distinction between interpretation and implied terms. In a contract when the terms are specifically mentioned and a party is bound to the condition is an interpreted term whereas

Abhishek Kumar Jain

there are implied terms which are not mentioned in the draft however a party has to agree on these condition. Part II consists of the papers that deal with remedies for breach. Starting with the chapter 9 titled as Contract remedies a paper by Paul G. Mahoney (chapter 9) where he emphasized the general problem in a contract, taxonomy of damage (due to breach) measures and alternative damage measures. He also provided an illustrative note on the calculation of expectation and reliance damages. Chapter 10 produces an economic view on the penalty clauses. Author has covered literature appeared during 1977 to 1996, which provides a comprehensive picture of gradual changes that took place in the policies. Chapter 11 consist the concept of Impossibility and Impracticability where the parties are excused of the obligatory performance because it may be of impossible or impractical nature which involves greater risks. Donald J. Smythe has mentioned the gradual development in this concept and how this concept has become logical in economic terms. Economic perspective to anticipate the future events in the contract that may lead to loss is what Peter van Wijck has discussed in his paper Foreseeability (Chapter 12). He took a reference of famous English case of Hadley v. Baxebdale to elaborate the limitations of foreseeability. Option theory is considered as remedy from the breach of contract where the promisor has to perform or pay the damages. Abraham L. Wickelgren has provided rational thought to this concept in chapter 13, where he also mentioned the possibility of having a contractual solution to the holdup problem. In chapter 14, Klaus Wehrt has rightly quoted that the warranty is not a panacea against bad products to provide clarity on the concept of Warranty. In this chapter he has integrated the models that focus on the unilateral and bilateral context of the warranty contract to enlarge the market oriented perspective of the Warranty contract. A thorough effort has been made to collect the most relevant literature available on the Long Term Contracts. Chapter 15 brings a literature that discusses the long term contract and relation contracts that comes along with its nature of long duration. Chapter 16 compliments the previous chapter and takes the discussion further by providing reference of various law and economic literature available on long term contract. To make this section even better Chapter 17 and 18 are available having two ideal examples of Long Term Contract which are Marriage Contract (Chapter 17) and Franchise Contract (Chapter 18). It is very interesting to see how Antony W. Dnes has viewed the Marriage Contract and has rightly pointed out that even a mutual agreement in a personal relationship gets affected by the concepts of economics and he has provided a keen observation on the motives behind the marriages and how a partner chooses to separate due to some economic expectation. In case of Franchise Contracts is much traditional form of long term contracts. Anne-Sophie Vandenberghe makes Behavioral Science a core criterion in Chapter 19 i.e. Behavioral Approach to Contract Law, to analyze Law and more importantly Contract Law. A significant area of study i.e. Behavioral Law & Economics is instrumental in understanding the relation of behavioral science and how it challenges the theories of Law and Economics.

Abhishek Kumar Jain

Contract law has its own structure when applied into a Civil law system. In chapter 20 Ejan Mackaay tries to explore the difference in the application of Contract in Civil law system compared to Common law system. Chapter 21 works around the restitution for Quasi contracts & unjust contracts. Christopher T. Wonnell has critically analyzed available literature on the topic and provided commentary on economic perspective.

Abhishek Kumar Jain