Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94053
Authors: 
Schweizer, Urs
Year of Publication: 
2008
Series/Report no.: 
SFB/TR 15 Discussion Paper 247
Abstract: 
Contract law is usually perceived as a strict liability system. When a promisor fails to perform he is held liable even if he is without fault. If, however, an unusual contingency has arisen he may be excused from performing provided that he has taken reasonable precautions. For a setting with uncertain costs of and benefits from performance, it is shown that a fixed price contract is sufficient to generate efficient reliance and precautions incentives under the following legal regime. If the promisor has met the appropriate precaution standard then he is excused if performance fails to be profitable. Alternative regimes, in contrast, where he is excused if performance is inefficient or even is extremely costly distort investment incentives quite generally.
Subjects: 
performance excuse
impracticability doctrine
overreliance
efficient precaution
JEL: 
K12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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