We examine rules of evidence and liability in contract litigation. When a contractor fails to perform, it has a legal defense that the buyer withheld private information relevant to the performance of the contract. Suppose the buyer claims that admitting evidence for the defense would compromise a valuable secret, e.g., a state secret, what should the legal rule be? We show that the evidentiary rules introduced by the Supreme Court in General Dynamics v. U.S. lead to a more efficient outcome than either a strict liability rule or an evidentiary rule requiring the disclosure of the buyer’s private information.
Contracts | Evidence | Law | Litigation
Date of this Version
Vlad Radoias, Simon J. Wilkie, and Michael A. Williams, "Rules of Evidence and Liability in Contract Litigation: The Efficiency of the General Dynamics Rule" (March 2015). University of Southern California Legal Studies Working Paper Series. Working Paper 156.