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3653This paper takes poultry industry as an example, and divides the contract content under the mode of " leading enterprises + farmers” into explicit contract and implicit contract. " Explicit contract” refers to the content of the contract with legal force. If enterprises violate the content of " explicit contract”, it is regarded as " explicit default”. " Implicit contract” refers to the clause not specified in the contract, and it is difficult for external institutions to determine the liability for breach of contract through the content of the clause. " Implicit default” refers to the behavior that enterprises do not need to bear the responsibility for breach of contract because of the unclear terms through changing the tacit content between enterprises and peasant households. The results show that the stability of implicit contracts will be affected by market price risks and the degree of contract constraints of farmers. The higher the market price risk is, the more recessive breach of contract enterprises tend to be. At the same time, the higher the degree of contract restrictionis, the more vulnerable farmers are to recessive breach of contract by leading enterprises. This recessive breach of contract will reduce the welfare of farmers. This paper holds that, from the perspective of leading enterprises, the existence of implicit default of contract is beneficial. Under the impact of greater market risks, enterprises not only avoid assuming all risks, but also do not need to blatantly breach the explicit contract to cause breach of contract compensation, thus maintaining the written cooperative relationship with farmers. But for farmers, the instability of implicit contract makes the profit margin decrease and the income risk rise. Therefore, it is particularly important to pay attention to the stability of " implicit contract” under the impact of market risks, in order to effectively protect the welfare of farmers.
/ Journals / Journal of Finance and Economics
Journal of Finance and Economics
LiuYuanchun, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YaoLan BaoXiaohua HuangJun, Vice Editor-in-Chief
The Impact of Market Risks on Contract Stability：Based on the Perspective of Implicit Default of Leading Enterprises in Agricultural Industrialization
Journal of Finance and Economics Vol. 45, Issue 10, pp. 112 - 124 (2019) DOI:10.16538/j.cnki.jfe.2019.10.009
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Cite this article
Zhou Li, Long Ziyan. The Impact of Market Risks on Contract Stability：Based on the Perspective of Implicit Default of Leading Enterprises in Agricultural Industrialization[J]. Journal of Finance and Economics, 2019, 45(10): 112-124.
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