Contractual Holdup and Legal Intervention

  title={Contractual Holdup and Legal Intervention},
  author={Steven Shavell},
  journal={The Journal of Legal Studies},
  pages={325 - 354}
  • S. Shavell
  • Published 1 June 2007
  • Economics
  • The Journal of Legal Studies
This article develops the point that incentive and risk‐bearing problems associated with contractual holdup may justify legal intervention. Contractual holdup is considered both for fresh contracts and for modifications of contracts. One type of legal intervention is flat voiding of contracts. Such intervention tends to be advantageous when holdup situations are engineered. Another type of intervention is price‐conditioned voiding of contracts—voiding only if the price is excessive. This policy… 
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