Permitting prohibitions: Theory and Application to Usury Laws(2018)
Legislation that seems unreasonable to courts is less likely to be followed. Building on this premise, we propose a model and obtain that the enactment of legislation prohibiting something raises the probability that courts will allow related things not expressly forbidden; we call that a "permitting prohibition". In particular, the imposition of an interest rate ceiling can make it more likely that courts will validate contracts with interest rates below the legislated cap. We also show that legal uncertainty is greater with legislation that commands little deference from courts than with legislation that commands none. We discuss examples of effects of legislated prohibitions (and, in particular, usury laws) that are consistent with the model.
- interest rate cap
Publication DateJanuary, 2018
Citation InformationGUIMARÃES, Bernardo; SALAMA, Bruno Meyerhof. Contingent Judicial Deference: Theory and Application to Usury Laws , 2017. Disponível em: https://works.bepress.com/bruno_meyerhof_salama/126/. Acesso em XX.XX.XXXX. __________ Guimarães, Bernardo; Salama, Bruno Meyerhof. Contingent Judicial Deference: Theory and Application to Usury Laws, 2017. Available at: https://works.bepress.com/bruno_meyerhof_salama/126/. [Accessed Day Mo. Year]