Rejection of Executory Contracts in Bankruptcy and Reorganization
The University of Chicago Law Review
LEE SILVERSTEINt N THE law of secured commercial transactions, one of the hazards with which a seller or lender must reckon is the possible rejection of the debtor's executory contracts by the trustee in bankruptcy or reorganization. Unfortunately, the law on certain aspects of the power of rejection is by no means clear. Despite the fact that the power has been recognized since at least 1794,1 neither the courts nor the learned writers 2 have developed a dear and consistent rationale for its
... rationale for its exercise. The courts have usually been content to allow or disallow the exercise of the power without exploring its underlying policy basis or bases. The purpose of this article is to examine the cases and statutes on the power of rejection so that a consistent and practical theory of the power may be stated. This approach requires both a historical review of the subject and a comparison of the present English and American law. Proposals for amendment of the American law will be made at appropriate places.