Contract Law

Abstract

This chapter presents an overview of the behavioral analysis of contract law. It first presents a behavioral theory of contracts that highlights the role of values such as promise-keeping and trust, and examines how the role played by those values depends on whether the contract is a product of negotiation or not (i.e., a standard-form contract). The chapter then discusses specific issues in contract law from a behavioral viewpoint—including pre-contractual negotiations (with special emphasis on the role of default rules and other reference points), contract formation, contract interpretation and supplementation, performance, and remedies for breach of contract, including agreed-upon remedies.