Moreover, because of the large number of people involved, it becomes very difficult to conduct negotiations without significant costs, either with the beneficiaries of pollution or between beneficiaries and polluters. While it is costly to conduct negotiations or impose a fee, Coase himself indicates that the initial allocation of rights can affect the overall effectiveness of the system. Farrell (1987) found that even free negotiations due to games by participants would probably not achieve social optimum. The simplest case is a case in which: (i) the cost of changing the allocation of pollution is higher than the maximum area between the two marginal payment curves, (ii) property rights can be allocated with very coarse instruments (for example. B, property rights all go to either Agent 1 or Agent 2), and (iii) reallocation (but no negotiation) is expensive. In these assumptions, the initial allowance influences the loss of well-being. If the dead weight loss of Agent 1 is much lower than that of Agent 2, then the socially effective result is to allow pollution instead of prohibiting pollution. A contract is a voluntary agreement between two or more parties, which is legally applicable. It is a legally binding agreement that requires two or more parties to perform certain tasks. It establishes the rights and obligations to the contracting parties.
A contract is a commitment or a series of promises made between two or more parties that allow the courts to render their judgment. It is a law dealing with the drafting and enforcement of treaties. Contracting generally requires an offer, acceptance, consideration, guarantee, capacity, free consent and mutual consent of two or more persons who must be linked. Contractual forms can be written, orally and by behavior. Each agreement must have the essential elements of a valid contract. The agreement includes a valid offer from one party and valid acceptance of the offer by the other party when only that contract has been concluded. The agreement, which contains essential elements of a valid contract, is legally applicable. In the Muluki Civil Code, 2074, the offer, acceptance, legal relationship, the capacity of the parties, freedom of consent, legitimate property, writing and recording, security, efficiency and not expressly annulled it is part of a valid contract. In the modern age of legal development, contract law has a role to play in all activities of human society.
This is an inevitable object of economic or corporate law. Contract law is considered an important element of business law, given that the transaction is conducted between two or more parties and the relationship between them is governed and regulated by the treaty. Empirical studies on voluntary respect are relatively new and are gradually multiplying and fuelling theoretical discussions. Some documents, such as Arora and Cason (1995), examine the selection of companies that participate in voluntary, state-subsidized overcomponation programs, such as 33/50, sponsored by the U.S. Environmental Protection Agency. They find that companies that emit high toxic emissions are more likely to participate in this program. They see this result as a sign of hope, as these companies have the greatest potential to reduce emissions. Because of its carcinogenic potential and low exposure limits, acrylamide is considered a potential health hazard (JECFA, 2005). For this reason, in many countries, food authorities have asked food producers to take steps to limit the formation of acrylamide in their products (Amrein, Andres, Escher, Amado, 2007).