Template-Type: ReDIF-Paper 1.0
Title: Opportunistic Termination
Author-Name: Alexander Stremitzer
Author-Email: astremit@uni-bonn.de
Classification-JEL: K12, C7, L40, D30
Keywords: contract law, warranties, breach remedies, termination, harmonization
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 non-
	conformity 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 ef-
	fects. 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.
Note: 
Length: 37
Creation-Date: 2007-05
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse7_2007.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse7_2007