An Economic Critique On The Withdrawal Right In Distance Contract

Regarded as the most important regulatory technique in the field of consumerprotection, the withdrawal right is a balance weight that is granted to the consumers,and it is a means to intervene the autonomy of private law. The legislation ofgranting such a right aims at enhancing the consumer’s ability to fulfill their sake, sothat the inequality between the consumers and the sellers can be cured and the socialjustice under the autonomy of private law can be realized. But the withdrawal right,which is similar to the other means to intervene the autonomy of private law, shouldbe kept in a proper range, and it should achieve a balance between differentprinciples of the autonomy of private law. The balance character of withdrawal rightdetermines that the economic analysis is a relatively useful method to discuss theproblem of the appropriateness of withdrawal right.The withdrawal right that the The Consumer Rights Protection Law ofP.R.China granted is one in distance contract. The main practical meaning ofwithdrawal right in distance contract exists in that it can correct the structuralinformation asymmetry of distance trade. The economic researches have showed thatthe information asymmetry between consumers and sellers can lead to “the Marketfor ‘Lemons’” or inefficient trade, both of which are not desirable results, so thewithdraw right is then considered as to realize effectiveness. As a matter of fact, therole that the withdrawal right played against “the Market for ‘Lemons’” orinefficient trade is over calculated. In terms of the guard against “the Market for‘Lemons’”, it is necessary to grant the consumers a withdrawal right only when theycan know the quality information of the goods well, while most quality informationof the goods is hard to know. The role of the reputation feedback mechanism is alsoundervalued here. In terms of the guard against inefficient trade, the experienceinformation that we know through probation exists only in personalized goods, whilethe most goods are standard. By kinds of innovated information disclosure method,consumers can more effectively obtain the experience information they need. The withdrawal right brings many costs, among which the costs of unfixed legal nexus,the costs of the practice of withdrawal and the costs of legal affairs are the mostimportant.Because the effect of withdrawal right on the guard against “the Market for‘Lemons’” and the inefficient trade is doubtful, the overall effectiveness of thewithdrawal right can not be proved. In terms of individual trade, the ultimateundertaker of the withdrawal’s cost are the consumers, and the heterogeneity of themarket determines different opinions of consumers toward the withdrawal right. Togive the consumers a mandatory withdrawal right is, as a matter of fact, to deprivethem of the free choice of the withdrawal right, to deprive the sellers of the freechoice of the business practices, and to block the effective trade between theconsumers and sellers in terms of the withdrawal right, all of which also lead tocross-subsidy. A mandatory withdrawal constrains the freedom, makes injustice andleads to inefficiency. Compared with the legislation form that only grants a defaultwithdrawal or that leaves the withdrawal alone, the mandatory withdrawal is theworst legislative choice.