In the early models of incomplete contract neither party used to invest in the subject matter of the contract; those models primarily kept their focus on analyzing the effect of legal rules on parties' incentives to trade or to breach. The modern models stretched beyond that to include value...

This paper, which will appear as a chapter in the forthcoming Handbook of Law and Economics (A.M. Polinsky & S. Shavell, eds.), surveys major issues arising in the economic analysis of contract law. It begins with an introductory discussion of scope and methodology, and then addresses four topic...

This article develops the point that the problems associated with contractual holdup may justify legal intervention in theory, and the article relates this conclusion to legal intervention in practice. Contractual holdup is considered for both fresh contracts and for modifications of contracts....

Contract law governs agreements between parties. This paper contains the chapters on contract law from a general, forthcoming book, Foundations of Economic Analysis of Law (Harvard University Press, 2003). Chapter 13 presents an overview of the subject. Chapter 14 is concerned with contract...

In this paper we analyze whether trust can overcome the contractual hazards caused by the territoriality of law, how effective trust is and what the impact is on the sequential structure of trade. The paper contributes to the New Institutional Economics of International Transactions (NIEIT).

The legal foundation of the monetary system is the law of legal tender. The 'legal tender' concept is used in models to describe almost anything except for what it really means in actual laws. Such errors prevent an accurate evaluation of the importance of this legal status. This note explains...

Unlike conventional contracts established through speech, written words, or actions, smart contracts are algorithmic, self-executing and self-enforcing computer programs. In this article, we analyze smart contracts from the perspective of digital platforms and the Finnish contract law. We...

Unlike conventional contracts established through speech, written words, or actions, smart contracts are algorithmic, self-executing and self-enforcing computer programs. In this article, we analyze smart contracts from the perspective of digital platforms and the Finnish contract law. We...

While various liability rules of tort law provide efficient incentives to invest, breach remedies of contract law are claimed to be distortive. Since, at least in Germany, obligations law provides general rules for both contractual and tort relationships such discrepancy seems puzzling. The...

Recent work in the field of mechanism design has led some researchers to propose institutional changes that would permit parties to enter into nonmodifiable contracts, which is not possible under current contract law. This paper demonstrates that it may well be socially desirable not to enforce...