Theory Of Efficient Breach Research Articles

Actual and Virtual Specific Performance, the Theory of Efficient Breach, and the Indifference Principle in Contract Law

Actual and Virtual Specific Performance, the Theory of Efficient Breach, and the Indifference Principle in Contract Law

On the enforcement of specific performance in Civil Law countries

Proponents of specific performance as a remedy for breach of contract have found support in the alleged use of the remedy in Civil Law countries. However, we provide evidence that specific performance is in fact a rare remedy in Denmark, Germany and France, and under CISG, when performance requires actions to be undertaken, and we relate this to costs of enforcement. We argue that it is administratively costly to run a system of enforcement that renders specific performance attractive to the aggrieved party, and that the Civil Law countries have (like Common Law countries) chosen not to incur these costs of enforcement. This is especially clear in the case of Denmark, where specific performance of actions has been abandoned as a legal remedy. At the normative level, we argue that enforcement costs provides an additional rationale, over and above the rationales of the theory of efficient breach, for damages and against specific performance as the general remedy.

The Case for Specific Performance as the Primary Remedy for Breach of Contract in New Zealand

This article examines the appropriateness of damages as the primary remedy for breach of contract in New Zealand. It argues that the civil law approach to contractual remedies, which gives primacy to performance of the obligation, is superior to New Zealand's common law position, which merely seeks to replace the right to performance with an award of damages. The importance of both the normative and practical impact of the remedial framework is examined in order to demonstrate that specific performance is better able to facilitate commercial endeavours. The three justifications for the primacy of damages in the common law (the historical development, the economic theory of efficient breach, and the concern that specific performance will overburden the administration of justice) are examined but rejected as adequate justification for the common law position. It contends that specific performance should be the primary remedy because it is more consistent with the principles that underlie the law of contract. It also contends that specific performance is more practical because it reduces conflict and promotes efficiency. The recommendation is that any change should be through appropriate legislation.

Efficiency, disgorgement and reliance in contract: a comment on Campbell and Harris

In a recent article in this journal, David Campbell and Donald Harris criticise the House of Lords decision in A-G v Blake, which held that in some circumstances there can be a liability to surrender the profits of a breach of contract to the other contracting party, ie a liability for disgorgement, as it will be referred to here. The criticism invokes what is sometimes referred to as the economic theory of efficient breach, which can be expressed briefly as follows. The performance of contracts generally increases aggregate wealth – ie is efficient – because parties will contract only on terms that provide them with a benefit that exceeds their costs of performance. But sometimes the circumstances will change after contracting, such that overall wealth will be maximised if the contract is not performed as agreed. For example, the defendant contracting party may discover an opportunity that he or she can take up only by abandoning the contract, and this opportunity may generate enough money to leave a profit, even after the claimant has been compensated for breach.

Breach of Contract and the New Remedy of Account of Profits

This paper outlines the general loss–based damages rule when a breach of contract is established, in light of the competing policy objectives of enhancing contract rights v efficient breach. The economic premises behind the theory of efficient breach are briefly discussed. The paper then summarizes the legal background to the House of Lords decision Attorney–General v Blake and Another[2000] 3 WLR 625 where it was ruled that in exceptional cases the plaintiff who has suffered no loss as a result of the breach may recover the resultant profits that the defendant has gained. The court was reluctant to specify fixed rules as to when the discretion should be exercised. The article concludes that the remedy was specifically devised for Blake’s case and will have extremely limited application.

Misreading Oliver Wendell Holmes on Efficient Breach and Tortious Interference

Oliver Wendell Holmes' most notorious statement about contract law was that duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it,-and nothing else. This has generally been interpreted to mean that a contracting party has a lawful option to perform or not. Holmes, however, was speaking of remedial limitations and did not espouse the belief that a contracting party had a right to In other writings he equated a contractual breach with the commission of a tort. As a judge he labeled contract breaches as wrongs. The misreading of Holmes has given comfort to theorists who espouse the notion of breach. The paper demonstrates that, whatever the merits the theory of efficient breach may have as an economic model, it has none as a legal postulate. Moreover, theorists who espouse the efficient breach theory, have difficulty in explaining why the law regards interference with a contract as a tort. Holmes, however, was one of the prime architects of the modern law of tortious interference.

Performance, Punishment and the Nature of Contractual Obligation

According to the theory of efficient breach, the reason the common law does not order specific performance presumptively for breach of contract,' nor punish deliberate breach,2 is that sometimes it is economically efficient for contracts to be broken.3 By limiting itself to awarding damages, the law allows indeed encourages contracting parties to breach whenever the cost of performance is greater than the value of performance. The theory of efficient breach has been subject to a variety of criticisms. Some critics, including some economists, argue that the rules regarding specific performance and punishing breach are not in fact efficient.4 Other critics argue that the notion of efficient breach is inconsistent with other features of the law, such as the awarding of nominal damages, the tort of inducing breach of contract or an executor's duty to perform contracts made by the deceased.5 Yet other critics emphasise the inconsistency between the theory of efficient breach and judicial statements about the 'wrongfulness' of breach or judicial statements to the effect that 'the purpose of a contract is performance and

Restitutionary Damages for Breach of Contract and the Theory of Efficient Breach: Some Reflections

Restitutionary Damages for Breach of Contract and the Theory of Efficient Breach: Some Reflections

Liquidated Damages, Penalties and the Just Compensation Principle: Some Notes on an Enforcement Model and a Theory of Efficient Breach

Liquidated Damages, Penalties and the Just Compensation Principle: Some Notes on an Enforcement Model and a Theory of Efficient Breach