Legal Economic Analysis Of Contract Law Principles

The contract law principles determine that the change of contract law system will necessarily be represented from its change due to the consistency and fundamentality of their effects, and the realistic economic relations are always interwoven with the contract relations. Based on the above, the economic analysis of the contract law principles is made by use of the theories and methods of the legal economics in this paper. It is thought that the change of the contract law system from the modern times to the contemporary times is based on the change of Pareto Efficiency Principle. The main line of the contract law principles penetrating the different realistic conditions is its encouragement of people's pursuit for their own legal interests. Neither the freedom principle of the modern contract law, public order and good custom principle nor honesty and credit principle of the contemporary contract law is the target of the contract law but only its means. It is concluded from the game analysis that the freedom of choosing the counterpart and contract contents is very important in the cooperative residual distribution, the regulation of the format contract, compared to the contract in bargaining, is not enough to meet Kaldor-Hicks Efficiency and the Pareto Improvement should be met, and the maximization of contract interests depends on not only themselves but also the others, so the lack of basic credits will decrease the contract interests and even make them disappear. Most of the domestic scholars study the change of the contract law system under the background of the civil law or grasp it macroscopically or carry out the comparison study, and there has been lack of microscopic study, methodology, analytic tools and trans-disciplinary study, etc. In the paper, the attempts in these aspects are made. The equilibrium analysis and game analysis of economics are used to focus on investigating the evolution of the contract freedom principle and honesty and credit principle in the microscopic level and the legislative and judicial suggestions are presented, which provides the basic theoretical support for the microscopic study of the contract law system and the new theoretical perspectives for the relevant study of the contract law and civil and commercial law.The paper is divided into five chapters in addition to the introduction: In the introduction, the topic of the paper is mainly presented and the targets of theoretical study are given. It is thought that the contract law, as part of the civil law, can be grasped in the process of investigating the civil law, but is different from the whole after all. The contract law more represents equality and meaning self-autonomy and the contractor hypothesis is very close to the hypothesis of rational person, so the microscopic analysis of the contract law system in the legal economic theory can not only make its change understood in the deeper level so as to provide the legislative and judicial theoretical criteria but also provide the new perspectives for the theoretic study of the contract law.Chapter 1 is why the legal economic theory can carry out the analysis of the contract law and argumentation of the necessary connection between the contractor hypothesis and the hypothesis of rational person, which establishes the theoretical requisites and provides the analytic tools and methods for the concrete analysis of the contract law system. It is thought that the theory of rational choice of the legal economics provides the fully new perspectives for clearly and profoundly understanding the contractor. Because the hypothesis of rational person is very close to the contractor hypothesis, probability is provided for the use of the analytic tools of equilibrium analysis and game analysis in the analysis of the contract law.Chapter 2 mainly deals with the concepts, functions and relations of the basic principles of the contract law as well as the relations between the basic principles and the concrete principles of the contract law. It aims at disclosing their logic relations and position order in effects by use of the static analysis of the contract law principles so as to make the preparation of requisites for the economic analysis of the contract freedom principle and the honesty and credit principle. It is thought that the basic principles of the contract law should include equality principle, freedom principle, honesty and credit principle and transaction encouragement principle. Viewed from the efficiency pursued by the contract law, the equality principle is the basis, the freedom principle and the honesty and credit principle are means and the transaction encouragement principle is the target. At the same time, it is pointed out that the comprehensive use and play of the principles of the contract law is realized under the direction of the contracted just value. Because the different pursuits for the contracted just value are made in the different times, changes will occur to the play of roles, order of effects and range of adjustment, etc. of all the principles.Chapter 3 aims at carrying out the comprehensive and careful analysis of the economic functions of the contract law and further disclosing the internal connection between the contract law and the legal economics, with the analytic path just opposite to that in Chapter 1. it is pointed out that law should pursue the efficient target, give play to restriction of the contract itself on the parties concerned and promote the efficient promises to be carried out. In practice, the roles of the contract law are mainly realized by the assurance provided by the party concerned for fulfilling the promises. The economic functions of the contract law mainly consist of the following. The first is to contain the motive of opportunism and create the opportunity of cooperation. The second is to internalize the cost of breach of contract and promote to produce the effective mechanism of fulfillment. The third is to limit the range of compensation for damages and promote to produce the optimal trust. The fourth is to provide the effective default articles and fill up the contract vacancy. The fifth is to adjust the contract-manifested articles and correct the failures of market.Chapter 4 is the concrete analysis of the contract freedom principle. Because the format contract is considered as the infringement upon the contract freedom principle, the format contract is analyzed and chosen as the starting point. The infringement of the format contract upon the freedom principle is mainly represented in the infringement upon the freedom of choosing the relative person and the contract contents in the format contract. Therefore, the impacts of the freedom of choosing the contract contents on the cooperative residual distribution are first analyzed and then the impacts of the freedom of choosing the relative person on the cooperative residual distribution are analyzed. It is thought that cooperation is Pareto Improvement, the formal freedom is sacrificed and the substantive freedom is realized if more consideration is given to fairness in the cooperative residual distribution. The main purpose of regulating the format contract is to make the format contract realize the substantive freedom in the cooperative residual distribution.Chapter 5 focuses on the economic analysis of the honesty and credit principle. Because the honesty and credit principle is developed from the ethic principle and very abstract, the author tries to analyze the process of evolution of the honesty and credit principle from the ancient Rome until now and disclose the legalized mechanism of such an ethic principle. It is thought that the honesty and credit principle actually include two meanings: honesty and engagement, that is, the objective honesty and credit principle and the subjective one of balancing the interests of the parties concerned. The objective honesty and credit principle is not the regulation necessarily produced in the market economy. The detailed regulations of the articles of breach of contract in the contract law replace many functions of the objective honesty and credit principle, but it still plays the active role of saving the transaction cost. The fundamental reason for producing the subjective honesty and credit principle lies in the existence of limited human rationality, behavior of opportunism and exclusivity of assets. The subjective honesty and credit principle is necessary to overcome the damages of the above existence to human cooperation. It will make the realistic contract concluded on the basis of equality, freedom and free will as possible as it can, reduce the cost in the process of conclusion and fulfillment of the contract and give play to the functions of encouraging transactions and increasing the social wealth.