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26 - Incentive Contracts

from Part III - Incentives

Published online by Cambridge University Press:  07 May 2021

By
Jesse Bull
Edited by
Benjamin van Rooij  and
D. Daniel Sokol
Benjamin van Rooij
Affiliation:
School of Law, University of Amsterdam
D. Daniel Sokol
Affiliation:
University of Florida
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Summary

Abstract: This chapter explores the importance of verifiability to contractual provision of incentives for contract performance or compliance. The crucial role of evidence and evidence-disclosure decisions is highlighted. Parties to a contract dispute convey information to the court by disclosing evidence. Actions taken by the parties in the productive phase (or primary activity) of their relationship influence the evidence that is available should a dispute arise. These considerations are important for practitioners in that 1) the lack of evidence to prove one’s claim may lead to some productive relationships being avoided or undertaken at a less than optimal level, and 2) the primary activity of the parties may involve steps to ensure relevant evidence should a breach occur. Many practical examples are discussed.

Type
Chapter
Information
The Cambridge Handbook of Compliance , pp. 373 - 382
Publisher: Cambridge University Press
Print publication year: 2021

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