ABSTRACT
This chapter shows there are three strands of public policy conceivable under the law and economics approach: public policy as a protection for parties in the contract; public policy as a protection for third parties outside the contract; and public policy as a means for redistributive justice. Scholars have rarely engaged the doctrine of public policy directly although their entire field of research is directed toward promoting the particular public policy of efficiency. When dealing with public interest matters, the doctrine of public policy allows courts to weigh the interest of the parties in enforcing the contract or award against the interest of society in non-enforcement. Protecting society in this sense is the principal mandate of the public policy doctrine under the law and economics approach. The chapter explores the Law and Economics analysis of the doctrine of public policy in order to grasp the economic justifications for this doctrine.
