Wilfulness vs. Expectation: A Promisor-Based Defense of Wilful Breach Doctrine

Abstract

Conventional wisdom is that the default remedy for breach of contract is and ought to be expectation damages, which are designed to put the injured promisee in the position she would have been in had the contract been performed. At the same time, the cases often refer to wilful breach, by which courts seem to mean especially bad, deliberate promisor conduct. Almost by definition, however, the wilfulness of a breach can have little to do with the promisee's expectation interest: that interest should only be measured with reference to the harm suffered by the injured promisee. Whatever the promisor did or failed to do to cause the harm would seem to be of no relevance in calculating the promisee's expectation. Commentators have typically sought to explain this tension by suggesting that expectation can often be measured or interpreted in many ways, and that what courts do when they deem a breach wilful is to use the defendant's bad behavior to pick the most generous definition of the plaintiff's expectation. We offer an alternative understanding that is cleaner and, we think, more compelling. Wilfulness matters not because it screens for a more generous expectation measure, but because it identifies those breaches that should be prevented or deterred. When wilfulness, so understood, is present, courts rightly award remedies that serve to deprive the promisor of any incentive to breach and thus to assure the promisee of getting full expectation.