The Economics of Contracts.
Economic analysis of law is an approach to legal theory that applies methods of economics to law. It includes the use of economic concepts to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated. Earlier the use of economic analysis for the study of law and legal institutions focused primarily to the fields of anti-trust legislation etc. Today, however, it is common to delve with property law, crime and punishment, torts, and contracts with economic tools. The economic basis for contract law is the creation of inducement for value maximizing behavior in the future; it encourages a process by which resources are efficiently stimulated through a series of exchange into successively more precious uses. This paper demonstrates the usefulness of underlying economic principles for explaining the basic doctrines of contracts, enforcement of contracts,formation defenses and performance defenses. It further explores economically efficient breach also. Read More