Constraints on the Development of the Firm

The interactions between different contractual solutions are described, considering that parties contract within an institutional environment with markets, laws and courts: Markets motivate contractual performance, laws improve individual parties rationality and courts complete and enforce contracts.  Public intervention is decisive in making these institutions more or less effective in their facilitating roles.  Several perverse tendencies are present, however.  In the legal field, forces are identified who produce excess of mandatory rules and, at the same time, a deficit in default or enabling rules.  Courts’ activity is also unduly biased against the quasi-judicial role of the parties and the market.