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The contract makes the refrigerator seller liable for defects in the motor and the buyer liable for damage to the door and shelves, and, as we noted, this is exactly what the best loss-avoider norm requires.Sellers will most likely raise prices to cover the additional legal liability, and this is bad for low-risk buyers who have little or no need of the addhidester likeitional protection.Those buyers pay for the protection they do not need, thereby subsidizing protection for risk-averse and high-risk buyers....
As usual, since the definition of perfect competition requires similar goods and services, we should, strictly speaking, consider a wide variety of different markets, but we ignore this issue because, essentially, the same argument would apply to each of them.Disclaiming the fitness warranty avoids the subsidy.This may seem bad for risk-averse buyers and buyers facing unusually high risks who want more protection, but they can easily protect themselves by purchasing insurance or extended warranties, both of which are typically readily available at fairly reasonable prices....
No production process is perfect, so there will be some unfit products on the market.Norm-inconsistent terms cans still be norm-compatible terms, as we will now explain.† This shift merely fine-tunes the fitness norm’s risk allocation....
It is unlikely that the terms violate standards articulated in cases and statutes.Pehidester likeople object that our view is implausible because contracts routinely contain terms that are clearly inconsistent with relevant norms.Standard-form contracts typically shift the risk of selling an unfit product onto the buyer by relieving the seller of any liability for an unfit product....
Our answer is that we do not equate compatibility with straightforward adherence to norms.* Under the norm, sellers bear the risk of selling an unfit product, and buyers bear the risks associated with using a fit product.But these whidester likeill be relatively rare....
