Larger transactions worsen the liquidity trap of litigation.
Evidence
Although, as the size of the transaction increases, the benefit of a legally enforceable contract increases relative to the transaction costs of litigation, the amount of capital that is tied up is greater, which in turn increases the opportunity cost of doing without the capital during the pendency of the litigation. — Lisa Bernestein, Opting out of the Legal System, 214
Categorization
- XREF: Connects to the opportunity-cost logic in law-and-economics literature and any business writing on litigation as a cash-flow hazard. — connects to: Enforcement of legal judgments depends on the technology and liquidity of wealth transfer. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 118; Private trade-enforcement systems fail when wealth transfer is costly — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 118; Court remedies fail small traders because individual losses cannot justify litigation cost. — Henry M. Hart, Jr. and Albert M. Sacks, The Legal Process: Basic Problems in…, 1370
Related
- Enforcement of legal judgments depends on the technology and liquidity of wealth transfer. (similarity 0.83)
- Court remedies fail small traders because individual losses cannot justify litigation cost. (similarity 0.79)
Broader Connections
- Enforcement of legal judgments depends on the technology and liquidity of wealth transfer.
#qualifies(0.75) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 118