Investments to Make Threats Credible, Rent-Seeking, and Duress

Document Type

Article

Publication Date

8-2015

Journal Title

Supreme Court Economic Review

ISSN

0736-9921

DOI

10.1086/686483

Abstract

Existing literature on the contract law doctrine of duress identifies a number of tests to determine conditions under which a contract can be voided. No article provides a specific and formal economic analysis on the link between rent- seeking and the conditions under which allowing a defense of duress is wealth enhancing. This article shows that commitments made as a result of ex ante investments by threatening parties made solely for the purpose of transferring, rather than creating wealth, ought to be voidable. We discuss cases in which a test based on rent-seeking enhances efficiency where previously proposed tests do not.

First Page

341

Last Page

351

Num Pages

11

Volume Number

23

Issue Number

1

Publisher

University of Chicago Press

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