Lesion beyond moiety

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Lesion Beyond Moiety is a civil law term used to describe the ability of a seller of immovable property to rescind that sale if the price paid for the property is less than (usually half of) the actual value of the property at the time of the sale.

Louisiana Civil Code Article 2589 is entitled "Rescission for lesion beyond moiety" and states that the seller may rescind the sale of an immovable when the price is less than one half of the fair market value. Under this law, a seller may invoke this right even if he has renounced it.

The concept is known as laesio enormis in some other civil law countries, where it is not necessarily restricted to sales of immovable property. For example, under § 934 of the Austrian Civil Code, the party to a contract may rescind it if it receives less than half of the fair value of the consideration. The other party may avert rescission by agreeing to pay the difference to full value. The laesio enormis has been criticized from a law and economics perspective for its inefficient incentives. In many cases it is impossible to profit from gathering information because profits above the mentioned threshold are prohibited by the law (see Grechenig, Kristoffel R., "The Economics of the Rule of Laesio Enormis (Die laesio enormis als enorme Laesion der sozialen Wohlfahrt?)" published in the Journal für Rechtspolitik, No. 1, 2006 available at SSRN: http://ssrn.com/abstract=820187).