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Love It or Leave It: Property Rules, Liability Rules, and Exclusivity of Remedies in Partnership and Marriage

1995; Duke University School of Law; Volume: 58; Issue: 2 Linguagem: Inglês

10.2307/1192151

1945-2322

Saul Levmore,

Legal principles and applications

The traditional rule in partnership law is that a claim for final accounting is a partner's exclusive remedy. Under this rule, withdrawal from a partnership must precede or accompany legal actions against one's partners. A partner must love it or leave it, with judicial attention available only after leaving the relationship. Rather plainly, this rule can be unfair and inefficient. At the same time, there is something attractive about the idea of encouraging private compromise by limiting the availability of courts to parties that are unable to continue their relationships. Part II of this article introduces this tension by discussing the evolution of the rules of partnership law away from the love-it-or-leave-it, or exclusivity, tradition and by comparing traditional partnership law first to domestic relations law, where the love-it-or-leave-it character of remedies is even more striking, and then to corporate law, where the structure of remedies is almost reversed. Parts III and IV connect this exploration of remedies to a familiar framework in the law-and-economics literature that compares property rules and liability rules. The connection reveals new ways of thinking about the remedies in partnership law and casts light on the occasional attractiveness of love-it-orleave-it rules. Part V compares the selection of remedies in business and in marriage, with some reference to other relationships as well. Part VI offers some concluding comments about love-it-or-leave-it strategies and the evolution of our legal system.