Contracts between Legal Persons
Contract law and the economics of contract have, for the most part, developed independently of each other. In this essay, we briefly review the notion of a contract from the perspective of lawyer, and then use this framework to organize the economics literature on contract. The review thus provides an overview of the literature for economists who are interested in exploring the economic implications of contract law. The title, Contracts between Legal Persons, limits the review to that part of contract law that is generic to any legal person. A legal person is any individual, firm or government agency with the right to enter into binding agreements. Our goal is to discuss the role of the law in enforcing these agreements under the hypothesis that the legal persons have well defined goals and objectives.
We thank Kevin Davis, Robert Gibbons, Avery Katz, John Roberts and participants at the 4th annual Research Triangle Conference on Law and Economics for comments on earlier drafts. We also thank Wilfredo Lim for great research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
“Contracts between Legal Persons,” with Lewis Kornhauser, in The Hand- book of Organizational Economics , Robert Gibbons and John Roberts, editors, December 2012, Princeton University Press, Princeton, NJ.