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On and Off Contract Remedies Inducing Cooperative Investments

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  • Richard R.W. Brooks
  • Alexander Stremitzer

Abstract

A party dissatisfied with the contractual performance of a counterparty is typically able to pursue a variety of legal recourses. Within this apparent variety are two fundamental alternatives. The aggrieved party may (i) 'affirm' the contract and seek money damages or specific performance, or (ii) 'disaffirm' the contract with the remedy of rescission and seek restitution. This simple dichotomy of contract remedies applies broadly in both common law and civil law practice. We show here that this remedial regime allows parties to write simple contracts that induce first-best cooperative investments. Copyright 2012, Oxford University Press.

Suggested Citation

  • Richard R.W. Brooks & Alexander Stremitzer, 2012. "On and Off Contract Remedies Inducing Cooperative Investments," American Law and Economics Review, American Law and Economics Association, vol. 14(2), pages 488-516.
    • Handle: RePEc:oup:amlawe:v:14:y:2012:i:2:p:488-516
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    References listed on IDEAS

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