ECO320Y5 Chapter Notes - Chapter 8: Decision Rule, Microeconomics, Market Failure
Document Summary
Common law uses the technical term consideration to describe what the promisee gives the promisor to induce the promise. It is enough for enforceability under the bargain theory that the promisor found the consideration adequate to induce the promise. Bargain theory holds that courts should determine whether a bargain occurred, not inquire into whether the bargain was fair. Supervising all bargains for fairness would burden the courts and inhibit commerce: according to the will theory, a binding contract requires an intention by the parties to be bound. Contract law should enforce such a promise in order to help the people get what they want. In contrast, a legal theory that satisfies the desires of the people affected by the law can be called responsive. In general, a responsive theory maximizes the well-being of people, whereas a dogmatic theory sacrifices the well- being of people in favor of other ends: contemporary courts in america prefer to be responsive rather than dogmatic.
