Rules of Evidence and Liability in Contract Litigation: The Efficiency of the General Dynamics Rule

Journal of Public Economic Theory. 2017;19:1154–1165

Posted: 13 Mar 2015 Last revised: 21 Apr 2018

See all articles by Vlad Radoias

Vlad Radoias

Sam Houston State University - College of Business Administration

Simon Wilkie

University of Southern California Law School

Michael A. Williams

Competition Economics LLC

Date Written: March 23, 2015

Abstract

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.

Keywords: Procurement auctions, State-Secrets Privilege, Superior Knowledge, Private Information

JEL Classification: D44, D82, H56, H57

Suggested Citation

Radoias, Vlad and Wilkie, Simon and Williams, Michael A., Rules of Evidence and Liability in Contract Litigation: The Efficiency of the General Dynamics Rule (March 23, 2015). Journal of Public Economic Theory. 2017;19:1154–1165, Available at SSRN: https://ssrn.com/abstract=2576943 or http://dx.doi.org/10.2139/ssrn.2576943

Vlad Radoias (Contact Author)

Sam Houston State University - College of Business Administration ( email )

1803 Ave I
Huntsville, TX 77341
United States

Simon Wilkie

University of Southern California Law School ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

Michael A. Williams

Competition Economics LLC ( email )

2000 Powell Street
Suite 510
Emeryville, CA 94608
United States

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