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ENFORCING CONTRACTSEffective commercial dispute resolution has manybenefits. Courts are essential for entrepreneursbecause they interpret the rules of the market andprotect economic rights. Efficient and transparentcourts encourage new business relationships becausebusinesses know they can rely on the courts if a newcustomer fails to pay. Speedy trials are essential forsmall enterprises, which may lack the resources tostay in business while awaiting the outcome of a longcourt dispute.What do the indicators cover?Doing Business measures the time and cost forresolving a standardized commercial dispute througha local first-instance court. In addition, this year itintroduces a new measure, the quality of judicialprocesses index, evaluating whether each economyhas adopted a series of good practices that promotequality and efficiency in the court system. This newindex replaces the indicator on procedures, whichwas eliminated this year. The ranking of economieson the ease of enforcing contracts is determined bysorting their distance to frontier scores. These scoresare the simple average of the distance to frontierscores for each of the component indicators.The dispute in the case study involves the breach of asales contract between 2 domestic businesses. Thecase study assumes that the court hears an expert onthe quality of the goods in dispute. This distinguishesthe case from simple debt enforcement. To make thedata comparable across economies, Doing Businessuses several assumptions about the case: The dispute concerns a lawful transactionbetween two businesses (Seller and Buyer),both located in the economy’s largestbusiness city. For 11 economies the dataare also collected for the second largestbusiness city. The buyer orders custom-made goods,then fails to pay. The value of the dispute is 200% of theincome per capita or the equivalent in localcurrency of USD 5,000, whichever is greater. The seller sues the buyer before the courtwith jurisdiction over commercial cases worth200% of income per capita or $5,000. The seller requests a pretrial attachment tosecure the claim. The dispute on the quality of the goodsrequires an expert opinion. The judge decides in favor of the seller; thereis no appeal. The seller enforces the judgment through apublic sale of the buyer’s movable assets.
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