Tim Friehe and Tobias H. Tröger
"Sequencing of Remedies in Sales Law",
German Working Papers in Law and Economics:
Printing Tip: Select the option to 'print as image' in the Acrobat print dialog to ensure the article prints as it appears on screen.
This paper analyzes the effects of different sequences of remedies on the incentives of sellers to invest in product quality and on the probability of contract termination. Despite ambitious efforts by the EU to harmonize national legislation, sales laws still differ significantly in Europe. The analysis uses a stylized model to compare the pertinent features of German law with their counterparts in English law. The pivotal difference between these jurisdictions lies in the sequencing of remedies. We find that it is possible that investment incentives and the probability that contractual relationships initiated will be completed may be larger under either legal regime. We also scrutinize more specific scenarios to derive clearer results despite the general case's ambiguity and to illustrate their context dependence.