Court awards of damages take place ex post, and anticipation of those awards provides ex ante incentives to fulfill promises, while leaving the flexibility to breach contracts when it is efficient to do so
The parties to a contract may also write into the contract contingencies in the event of breach. This liquidated damages approach is ex ante and is based on the principle that ________.
a) damages are intended as penalties for particular actions
b) damages should not be limited to compensation for harm
c) more complete contracts can be more efficient
d) the misuse of a product should be anticipated in advance
C
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