Firms, Contracts, and Financial Structure¶
Hart, O. (1995). Firms, Contracts, and Financial Structure. Oxford University Press.
Cited by¶
6 citations across 6 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Incomplete Contract
- The theory's central move is the prime's designated gap-handler: ownership is defined as residual control rights, the authority to decide whatever the contract left open.
This sourceProperty-rights theory of the firm tying ownership to residual control rights over incomplete contracts, with the verifiability gap as the reason gaps cannot be closed.
Supported in partVerified against the publisher's abstract
Hart's abstract backs the frame — under incomplete contracts, control of productive assets and asset ownership allocate power — but never states that ownership is defined as residual control rights.
“If the terms of a transaction can always be renegotiated, the incentives of a party to undertake relationship‐specific investments will depend crucially on the ability to control the use of productive assets when renegotiation takes place. Asset ownership becomes an essential source of power.”
- The theory's central move is the prime's designated gap-handler: ownership is defined as residual control rights, the authority to decide whatever the contract left open.
- Mandatory vs. Default Norms
- Hart (1995), in his theory of incomplete contracts and residual control rights, formalizes precisely this trade-off: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines which party bears the residual risk of unforeseen circumstances and how flexibly the relationship can adapt.
This sourceDevelops the theory of incomplete contracts and residual control rights: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines who bears residual risk and how flexibly the relationship adapts.
Supported in partVerified against the publisher's abstract
The book's abstract establishes that incomplete contracts make power and control allocation central, but says nothing about mandatory rules or gap-filling defaults.
“The basic argument is that in a world of incomplete contracts, institutional arrangements are designed to allocate power among agents.”
- Hart (1995), in his theory of incomplete contracts and residual control rights, formalizes precisely this trade-off: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines which party bears the residual risk of unforeseen circumstances and how flexibly the relationship can adapt.
- Transaction Costs
- In development economics, transaction-cost analysis structures understanding of why property rights, contract enforcement, and financial-market infrastructure are so important for growth (
This sourceDevelops the theory of incomplete contracts and residual control rights: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines who bears residual risk and how flexibly the relationship adapts.
- In development economics, transaction-cost analysis structures understanding of why property rights, contract enforcement, and financial-market infrastructure are so important for growth (
Mechanisms¶
- Cooperative Contribution Charter
- And because no charter can foresee every case, treating it as if it settles everything invites brittle, letter-of-the-law rigidity; every charter is an incomplete contract.
This sourceExplains that contracts remain incomplete because parties cannot specify in advance every contingency that may arise.
- And because no charter can foresee every case, treating it as if it settles everything invites brittle, letter-of-the-law rigidity; every charter is an incomplete contract.
- Performance Contract
- It can only bind what was foreseen and written
This sourceExplains that contracts cannot specify every contingency in advance and therefore leave residual discretion over contractual gaps.
- It can only bind what was foreseen and written
- Principal–Agent Contracting
- Its failure modes trace to incomplete contracts
This sourceExplains incomplete contracting as the inability to describe all future contingencies in a contract.
- Its failure modes trace to incomplete contracts
Verification¶
Does it exist? Confirmed. This work's DOI resolves to a registered record, which fixes its identity. That is all it fixes.
Does it back the claim? Read against the text for 2 of 6 citations: 2 supported in part. Each verdict is shown under its citation below, with what in the work backs the sentence.
Support is checked per citation rather than per work — the same source can be cited soundly in one article and wrongly in another. Per-citation recording began recently, so a citation with no recorded check is a gap in the record rather than evidence it went unchecked.
See how references were verified.
Registry ID ref:66e5b26c67ae · see in the full table