At time 0, the buyer pays for the sellers promise to deliver good g at time 2,

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At time 0, the buyer pays for the seller’s promise to deliver good g at time 2, where g is a differentiated good. Assume that the numbers given in the preceding question indicate the price of the closest substitute (which is not very close) and the extent of the buyer’s reliance. The seller’s costs of performing rise unexpectedly; so, the seller and the buyer bargain in an attempt to renegotiate the contract. Explain why the seller would rather renegotiate in circumstances in which the court gives reliance damages for breach rather than those in which the court gives expectation damages for breach.

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Law and economics

ISBN: 978-0132540650

6th Edition

Authors: Robert cooter, Thomas ulen

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