This chapter explores the importance of verifiability to contractual provision of incentives for contract performance or compliance. The crucial role of evidence and evidence-disclosure decisions is highlighted. Parties to a contract dispute convey information to the court by disclosing evidence. Actions taken by the parties in the productive phase (or primary activity) of their relationship influence the evidence that is available should a dispute arise. These considerations are important for practitioners in that 1) the lack of evidence to prove one’s claim may lead to some productive relationships being avoided or undertaken at a less than optimal level, and 2) the primary activity of the parties may involve steps to ensure relevant evidence should a breach occur. Many practical examples are discussed.
