Legal Definitions - Gresham's law

Gresham's Law is an economic principle that states that inferior products or practices tend to replace superior ones. This principle is often attributed to Sir Thomas Gresham, although earlier writers like Oresme and Copernicus also discussed it.

One example of Gresham's Law is the use of counterfeit money. If counterfeit money is circulated in an economy, people will tend to hoard the real money and use the counterfeit money instead. This is because the counterfeit money is inferior to the real money, but it is easier to obtain and use.

Another example is the use of low-quality materials in manufacturing. If a company uses low-quality materials to make a product, the product may be cheaper to produce, but it will be of lower quality than a product made with higher-quality materials. Consumers may choose to buy the cheaper, lower-quality product instead of the higher-quality one, leading to the displacement of the superior product.

These examples illustrate how inferior products or practices can displace superior ones, even if the inferior ones are of lower quality or value.