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http://hdl.handle.net/10419/22982
  
Title:Opportunistic Termination PDF Logo
Authors:Stremitzer, Alexander
Issue Date:2007
Series/Report no.:Bonn econ discussion papers 2007,7
Abstract:If a seller delivers a good non-conforming to the contract, Article 2 of the UCC as well as European warranty law allows consumers to choose between some money transfer and termination. Termination rights are, however, widely criticized, mainly for fear that the buyer resorts to "opportunistic termination", i.e. takes nonconformity as a pretext to get rid of a contract he no longer wants. We show that the possibility of opportunistic termination might actually have positive effects. Under some circumstances, it will lead to redistribution in favour of the buyer without any loss of efficiency. Moreover, by curbing the monopoly power of the seller, a regime involving termination increases welfare by enabling a more efficient output level in a setting with multiple buyers.
Subjects:contract law
warranties
breach remedies
termination
harmonization
JEL:L40
C7
K12
D30
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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