Yonsei University

Instructor
International Summer School
• Professor Tai-Yeong Chung (정태영)
Law and Economics
• E-mail: tchung@yonsei.ac.kr
Lecture 1 - revised
• Office hour: Zoom meeting by appointment

June 28, 2022

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Course Description Prerequisite

• The prerequisite for this course is
• Law and Economics is an interdisciplinary microeconomics.
subject.
– Economic Analysis of Law. • No prior knowledge on law is required.
• It uses economics to understand incentive
effects of law.
• Students will learn how microeconomic theory
can be used to critically evaluate law and
public policy.

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Required Text Goals of the Course

• Law and Economics,
R. Cooter and T. Ulen, 6th ed.,
Pearson Addison-Wesley. (2011).
• Textbook website:
http://scholarship.law.berkeley.edu/books/2/
1. Read cases as well as course materials
carefully.
2. Understand basic concepts of the course,
and use them in analyzing particular factual
circumstances.

3. Think like an economist about legal rules.

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1
 Academic Policies on Scholastic
Assessment
Offences and Penalties
• The midterm on July 18 counts 35% of the • The University will take all appropriate measures to
grade. promote academic integrity and deal appropriately
with scholastic offences.
• The final exam on August 4 counts 35%.
• Scholastic Offences include, but are not limited to,
• An essay project counts 15%. the following: Plagiarism, cheating on an exam.
• Three homework assignments makes up 15% • Penalties include: a) A failing grade in the
of the grade. assignment. b) A failing grade in the course
• When further academic policies are needed beyond
the policies stated above, academic policies of the
home university of the student will be applied.

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Classification of law Tentative Schedule - revised

• Public law
– Criminal
• (beyond a reasonable doubt)

• Private law (civil law)

– Property
– Contract
– Tort
• (preponderance of evidence, or balance of probabilities)

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Tentative Schedule - revised Example 1: Accident during screen-golf

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 Example 1: Accident during screen-golf
• The victim sued
– Screen-golf store owner
– Screen-golf franchise headquarter
– Golf club manufacturer
http://news.khan.co.kr/kh_news/khan_art_view.ht
ml?artid=201506291506381&code=940301
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Example 2: Breach of Contract (Ch. 1)
• An oil company signs a contract to deliver oil by a certain date
from the Middle East to a European manufacturer. Before the
oil is delivered, war breaks out in the exporting country, so
that the oil company cannot perform the contract as promised.
The lack of oil causes the European manufacturer to reduce
production and lose profits.
• The manufacturer brings an action (i.e., files a lawsuit) against
the oil company for breach of contract and asks the court to
award it a sum of money, called “damages,” that is equal to
the amount of profits the manufacturer would have realized if
the oil had been delivered as promised.
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Example 3: Nonwaivable warranty of
habitability
• A dwelling must have certain features such as heating, hot
water, whether or not such terms are in the lease and even if
the lease explicitly excludes such terms.
• Who is made better off and who is made worse off by a legal
doctrine that says tenants must have air conditioning system?
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Economic Analysis of Law
• It uses economics to understand incentive
effects of law.
– Predict effects of legal sanctions on behavior.
– Predict how people respond to laws.
– Predict effects of policies on efficiency.
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Contract example continued
• Unfortunately, the contract is silent about the risk of
nonperformance in the event of war, so that the court cannot
simply read. the contract and resolve the dispute on the
contract’s own terms.
• In resolving the suit, the court must decide whether to excuse
the oil company from performance on the ground that the
war made the performance “impossible” or to find the oil
company in breach of contract and to require the oil company
to compensate the manufacturer for lost profits.
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