LAW 525 Lecture Notes - Lecture 1: Ultra Vires, Transaction Cost, Consumer Protection
28 Jul 2016
School
Department
Course
Professor
Document Summary
Basic framework for market transaction arises from: 1) contract law voluntary obligation between parties, 2) tort law obligations imposed by the common law (the courts, relying on these may be inadequate. Gov"t may create legislation & regulation to further protect consumers from market failures: 1) monopolistic behavior, 2) negative externalites. Unknown cost are assumed by consumer (e. g. unknown hazards & risks: 3) information failures. Information imbalance businesses know their products (including hazards & attributes) better than consumers. Gov"t response laws: minimum safety standards, mandatory disclosures, prohibition of certain sales practices, prohibit the sale of certain products to certain consumers (e. g. age, licenses, liability for defective or harmful products. Gov"t attempt to minimize transaction cost associated with consumer protecting themselves. Gov"t response laws: cool off periods, statutory cause of action , availability of small claims courts, class proceedings, ombudsman. Managing legal risk -> 3 steps: 1) identify risks, 2) evaluate risks, 3) respond to the risks.
