On the Validity of Judicial Verdict Under Asymmetric Information : Concurrent Liability of Contractual Fraud and Contract Breach

The judges are vital to the effective operation of judicial system. Any evaluation of judicial institution and judicial reform should be based on the incentive of these institutions to the judges and the rational reaction of the judges thereto. With a discussion of different treatments to the concurrent liability of contractual fraud and contract breach in theory and in practice, this article examines how valid verdict is made in the dimension of judge. There are three types of asymmetric information in judicial system and as rational persons, judges will follow the verdict-making model in which judges can maximize personal interests. In both theory and practice, there is no specific standard of valid verdict and judges follow the so-called misjudgment rate to avoid negative effect to personal promotion. The investigation of misjudgment and cased guidance system cannot solve the negative effect of the opportunism of judges, which results in the court failure. Court failure roots in the instrumental value orientation of the rule of law and the lacking of associated institutions of judicial, political social governance, especially the diversified social dispute resolution mechanism