The Erosion of Rights by Past Breach

Omri Ben-Shahar

American Law and Economics Review, 1999, vol. 1, issue 1-2, 190-238

Abstract: Legal rights may erode as a result of past, uncontested, breach. In light of ongoing violations, the rightholder's lackluster enforcement may result in the loss of the entitlement. The doctrines of course of performance in contract law and adverse possession in property law are prominent examples of this widespread erosion phenomenon. In analyzing the effects of such laws, the article confronts two conflicting intuitions. On the one hand, the "license" to continue breach prospectively encourages opportunism. On the other hand, the risk of erosion may reinforce the rightholder's motivation to take antierosion measures, bolstering the credibility of the threat to enforce, thus better preserving the entitlement. The article proves that these two effects of erosion rules always balance out. The same amount of value will be extracted from the rightholder, irrespective of the law's erosion doctrine. The article also demonstrates the limits of this "irrelevance" claim and the factors that may lead to its collapse. It applies the analysis to offer new perspectives on various prominent legal rules. Copyright 1999 by Oxford University Press.

Date: 1999
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