Conceptual Interaction and Mutual Influence of Economic Theories of Imperfect Contract and Transaction Cost with Secondary Real Estate Registration System

Document Type : Original Article

Authors

1 Associate Professor, Faculty of Law & Political Sciences, University of Tehran, Tehran, Iran.

2 Ph.D., Faculty of Law & Political Sciences, University of Tehran, Tehran, Iran

Abstract

In terms of economic analysis of law, one of the goals of legal institution for registration of real estate transactions, is reducing and correcting “Imperfect Contracts” and “Transaction Costs” to optimal use of scarce resources i.e. real estate. It is important to analyze the relationship and mutual influence of the economic theories of incomplete contract and transaction costs with the legal system of secondary real estate registration, in order to prevent contractual defect and the economic inefficiency of these contracts; because the real estate is one of the most important assets of people and its transactions face legal and economic risks and also unregistered real estate transaction is one of the most important examples of imperfect contract. On the other hand, the efficiency of the registration system and the stability of the legal status of real estate also require attention to the economic foundations of this system (including the above theories) in establishing or amending the relevant rules. Therefore, the question arises that how does the existence of secondary registration system help to correct imperfect contracts and reduce the costs of real estate transactions? This article is a theoretical-practical research that used Library research method and investigating about problem and analyzing the data is based on descriptive-analytical method. Finally, it was concluded that the lack of a secondary real estate registration system or the existence of an incomplete registration system leads to the conclusion of legal imperfect contracts and increasing the cost of transaction. It is desirable, in economic perspective, not to have an “absolutely imperfect real estate contract”. So, it is necessary to exist the principle of mandatory registration of transactions with the sanction of non-acceptance the transactions that have ordinary documents. In fact, a secondary registration system with compelete legal effect (concluding an effective sanction for registering the real estate transaction and the unity of legal system in identifying the owner), leads to the conclusion of the legal perfect contract and the economic partially imperfect contract and causes to reduction of real estate transaction costs

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References

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History

  • Receive Date: 16 March 2024
  • Revise Date: 27 May 2024
  • Accept Date: 25 September 2024

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