On the Economics of Good Faith Acquisition Protection in the Draft CFR

Posted: 26 Sep 2008 Last revised: 1 Apr 2011

See all articles by Arthur F. Salomons

Arthur F. Salomons

University of Amsterdam - Centre for the Study of European Contract Law (CSECL)

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Date Written: September 26, 2008

Abstract

This article assesses the soundness of the policy choices made in the DCFR with regard to the problem of good faith purchase (art. VIII-3:101), by confronting the provision with the literature in which this problem is analysed from an economic perspective. Most of the law & economics authors regard the good faith purchase rule - under which a transfer to an acquirer in good faith is valid despite lack on authority on the part of the transferor - the most efficient rule for embezzled goods, but they are divided over the question which rule is best for stolen goods: that same rule or its opposite: the original owner rule. It is generally agreed that, in case of application of the good faith purchase rule, no protection should be awarded to buyers who are not objectively in good faith; buyers must be induced to inquire whether the seller has authority to transfer the good. The burden of proof receives little attention, but according to some authors, the buyer should bear the burden of proof with regard to his good faith; a less far-reaching solution is to presume the buyer's good faith on the condition that he provides information about the circumstances of his acquisition.

Keywords: good faith purchase, movables, theft, economics, efficiency, ownership

JEL Classification: K11

Suggested Citation

Salomons, Arthur F., On the Economics of Good Faith Acquisition Protection in the Draft CFR (September 26, 2008). Centre for the Study of European Contract Law Working Paper Series No. 2008/09, Available at SSRN: https://ssrn.com/abstract=1274152

Arthur F. Salomons (Contact Author)

University of Amsterdam - Centre for the Study of European Contract Law (CSECL) ( email )

P.O. Box 1030
Amsterdam, 1000 BA
Netherlands

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