An Economic Analysis Of Contract Remedies

The institution of contract remedies is the kernel and the most complicated issue of contract law. Economic analysis of contract remedies is always one of the hotest issues in the law and economics studies. The existing law and economics literature attempts to identify the optimal contract remedy through analyzing the effects of various remedies on the contract parties' breach behavior, reliance investments and precaution investments. Based on a thoroughly review of existing literature, this dissertation further studies the effects of the doctrine of anticipatory breach of contract and the institution of exceptio non adimpleti contractus, which are the other two basic institution in contract law, on the behavioral incentives of contract remedies. This study is of great theorical significance for economic study of contract law.The doctrine of anticipatory breach of contract and the institution of exceptio non adimpleti contractus are introduced into contract law of China until 1999, and the concrete clauses of these two institutions are very rough and hard to be applied in civil procedure. An economic analysis of them would be of great significance in promoting the improvment of contract law of China, too.This dissertation includes six chapters. Chapter one discusses the studying background and the significance of the topic, and defines the studying scope. Chapter two reviews the related literatures. Chapter three establishes a basic economic model of contract remedies, focusing on the effects of various contract remedies on the parties' breach, reliance and precaution decisions. Chapter four extends the former analysis to the case of anticipatory breach of contract and compares two different doctrine of anticipatory breach of contract. Chapter five studies the behavioral effects of the institution of exceptio non adimpleti contractus in bilateral contracts. Chapter six is a conclusion.There are two main conclusions of this dissertation:First, this dissertation extends the behavioral effect analysis of contract remedies into the situation of anticipatory breach of contract and compares two different doctrine of anticipatory breach of contract. The resultes demonstrate that the doctrine of anticipatory breach of contract increases the level of the promisor's breach of contract, while it decreases the promisee's reliance investments. Compared to English rule, the promisor breaches the contract more and the promisee's reliance investments decreseas more under American rule.Second, the institution of exceptio non adimpleti contractus distorts the behavioral incentives of the contract parties too.Under the routine remedy for breach of contract, the mtrodution of exceptio non adimpleti contractus decreases the level of the parties' breach and their incentives to invest in reliance both.