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I think the your second paragraph answers your first. In economics this tends to be called transaction costs, though I think that is typical economists avoidanc
by netsp 17y ago
I think the your second paragraph answers your first. In economics this tends to be called transaction costs, though I think that is typical economists avoidance of ever dealing with mess.
Standardised contracts allow buyers & sellers to compare, potential deals or other deals in their area.
A restaurant owner may not have trained his mind to value options or futures. He almost certainly can't see through the legalese. Besides the direct cost of having this explained to him by a lawyer (times how many contracts he has reviewed), I don't think it is preferable to hand over decision making power to a lawyer. They tend to undervalue upside.
Short answer: It's simpler.
- ShabbyDoo 17y agoI agree that standardization reduces transaction costs, but the cost to the landlord of having a unit sit vacant for a year seems significantly higher. And, there are probably restaurant owners who are operating sub-optimally -- maybe they aren't remodeling because they are scared of what the terms of the next lease will be like.
- netsp 17y agoI think that it is not unusual for lease terms to be negotiated on commercial property.