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Law and Economics Analysis of Liquidated Damages

Author: ChenYanRu
Tutor: WeiJian
School: Shandong University
Course: Political Economics
Keywords: Liquidated Damages Compensative Punitive Efficient Breach Law and Economics
CLC: D913
Type: Master's thesis
Year: 2008
Downloads: 191
Quote: 0
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Abstract


Liquidated damages is an ancient institution and a basic arrangement of relief for breach of contract.Law and Economics orrigin was formed in 1960s,whose main feature is economic ananlysis of law.The thesis verifies that liquidated damages is the optimal institution comparing with specific performance and damages for breach of contract from Law and Economics view.Liquidated damages should be used prior to other institutions.The thesis also categorizes punitive damages into applicable and not applicable cases and have some ideas about perfecting liquidated damages institution.The main content is as follows:Chapter 1 is introduction,it includes setting and significance of selecting the topic; researching theme;main researching thread;basic concept and institutional arrangement; frame; Chapter 2 are summary which incudes compensative damages and punitive damages;Chapter 3 is of importance, it analyses the efficiency of liquidated damages from compensative paradox; efficient breach and the optimal reliance investment;the optimal risk sharing; incentivizing information diplay and avoiding adverse selection.And liquidated damages is compared with specific performance and damages for breach of contract in order to proof that liquidated damages institution is the optimal;Chapter 4 analyses punitive damages and categorizes punitive damages into applicable and not applicable cases,then how to deal with punitive damages;Chapter 5 are some ideas about perfecting liquidated damages institution;Chapter 6 are concluding remarks and outlook,inclding further question ; innovations; inadequacy.The innovations are as follows: The thesis compares liquidated damages with specific performance and damages for breach of contract from the perspective of economic efficiency in order to verify that liquidated damages is the optimal and insist it should be applied prior to others; Punitive damages should be applied if it has no negative externality and punitive damages are categorized into applicable and not applicable cases;In the end,the author points out some ideas about perfecting liquidated damages institution on the basis of the former analysis.

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