Risk-shifting contract terms trade against lower produce prices

Evidence

One effective way of preventing a rejection is to condition the buyer’s right to claim damages upon his having accepted the goods. The language of the regulation imposes such a condition. There is nothing harsh or inequitable in such a contract since the buyer can always protect his right to claim damages by accepting the shipment. Furthermore, it was contemplated that ‘in most cases prices would rule commensurate with the risk’ (Appendix A, p.3). That is to say, where the buyer assumes additional risks, as under the ‘acceptance’ or ‘acceptance final’ forms of contract, a lower price presumably would be paid for the commodity. It is also to be borne in mind that the regulation retained the ‘f.o.b.’ form of contract for buyers who are unwilling to bargain away any right they might otherwise have to re3ecT. — Henry M. Hart, Jr. and Albert M. Sacks, The Legal Process, 1597

Categorization

• XREF: Price adjusts to compensate for assumed risk — an economic logic linking contract terms, pricing, and statutory purpose. — connects to: Monopsonistic commerce and export duties combined to suppress African crop prices; Contract terms depend on the relative bargaining power of customer and mafioso — Diego Gambetta, The Sicilian Mafia The Business of…, 419; Enforceable contracts enable cooperation by limiting worst-case risks — Russell Hardin, Trust and Trustworthiness, 254

Broader Connections

• Contract terms depend on the relative bargaining power of customer and mafioso #expands (0.80) — Diego Gambetta, The Sicilian Mafia The Business of…, 419
• Monopsonistic commerce and export duties combined to suppress African crop prices #complicates (0.75)
• Enforceable contracts enable cooperation by limiting worst-case risks #qualifies (0.72) — Russell Hardin, Trust and Trustworthiness, 254