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Rules of Evidence and Liability in Contract Litigation: The Efficiency of the General Dynamics Rule

Author

Listed:
  • Vlad Radoias

    (Department of Economics, Towson University)

  • Simon J. Wilkie

    (Department of Economics, University of Sourthern California)

  • Michael A. Williams

    (Competition Economics)

Abstract

We study the effects of different rules of evidence and liability in con- tract litigation. When a contracting firm fails to perform, it may blame the buyer for withholding private information. We show that the evidentiary and liability rules used by the Supreme Court in General Dynamics v. U.S. lead to a more efficient outcome than either a strict liability rule or an evidentiary rule requiring the disclosure of the buyer's private information for use by the contractor in litigation.

Suggested Citation

  • Vlad Radoias & Simon J. Wilkie & Michael A. Williams, 2014. "Rules of Evidence and Liability in Contract Litigation: The Efficiency of the General Dynamics Rule," Working Papers 2014-07, Towson University, Department of Economics, revised Oct 2014.
    • Handle: RePEc:tow:wpaper:2014-07
    as

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    File URL: http://webapps.towson.edu/cbe/economics/workingpapers/2014-07.pdf
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    References listed on IDEAS

    as
    1. Burguet, Roberto & Ganuza, Juan-José & Hauk, Esther, 2012. "Limited liability and mechanism design in procurement," Games and Economic Behavior, Elsevier, vol. 76(1), pages 15-25.
    2. Waehrer Keith, 1995. "A Model of Auction Contracts with Liquidated Damages," Journal of Economic Theory, Elsevier, vol. 67(2), pages 531-555, December.
    3. Alan Schwartz & Robert Scott, "undated". "Contract Theory and the Limits of Contract Law," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1011, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
    4. Spulber, Daniel F, 1990. "Auctions and Contract Enforcement," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 325-344, Fall.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Procurement auctions; state-secrets privilege; superior knowledge; private information.;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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