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Contract law and Contract theory. A survey and some considerations

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  • Daniel Danau

    (Normandie Univ, UNICAEN, CNRS, CREM, F-14000 Caen, France)

Abstract

In this study we parallel Contract theory and Contract law and over a few considerations about the link between the two literatures. First, we highlight that studies in Contract theory can be classi ed in analyses of principal agent relation-ships and analyses of speci c investment problems, and that Contract law mainly focuses on the latter, in general. This leaves aside the analysis of the potential role of the law, for instance, in containing the contractual costs of asymmetric information. Second, we try and clarify under what legal rules the parties fully commit with the contract, or they do not, taking into account that the notions of full and limited commitment are very common in Contract theory whereas they are not in Contract law. This further allows us to provide a uni ed presentation of the literature, based on the features of the contractual environment: complete versus incomplete contracting, full versus limited commitment. Third, we point out that, unlike studies in Contract law, studies in Contract theory devote little attention to the litigation process. For this reason, there is no uni ed analysis of optimal contracts accounting for the transaction costs that appear in the various stages of a contractual relationship.

Suggested Citation

  • Daniel Danau, 2019. "Contract law and Contract theory. A survey and some considerations," Economics Working Paper Archive (University of Rennes & University of Caen) 2019-04, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:2019-04
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    References listed on IDEAS

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    Cited by:

    1. Daniel Danau & Annalisa Vinella, 2021. "Under/Over‐Investment and Early Renegotiation in Public‐Private Partnerships," Journal of Industrial Economics, Wiley Blackwell, vol. 69(4), pages 923-966, December.

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    More about this item

    Keywords

    Contract law; Contract theory; Law and economics; Incomplete contracts;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law

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