Litigation forces promisees to borrow at inflated implicit interest rates. [causal]
Until a decision is rendered, the judgment enforced, and the dealer absolved of wrongdoing, other dealers will be either unwilling to sell to him on credit or will charge him a higher implicit interest rate on each transaction to compensate for the perceived increase in the risk of nonpayment and the depletion of his cash reserves. Thus, even if a court were to adjust its award of expectation damages by the correct interest rate, the promisee would still be undercompensated; until the controversy is resolved, the promisee will have to pay the higher implicit interest rate in every subsequent transaction, while the court will award him interest only on the amount of the original debt. Thus, the shortcomings in the expectation remedy are particularly acute in an implicit capital market.
Lisa Bernestein, Opting out of the Legal Sys…, loc. 155