Remedies For Breach Of Contract Research Articles

The effect of time on default remedies for breach of contract

Among default remedies for breach of contract, expectation damages are believed superior to property rules such as specific performance since they allow the promisor to breach inefficient contracts when renegotiation is economically infeasible. We examine whether the promisor's ability to accurately determine when to breach is maintained when taking into account the value of time that distinguishes between immediate performance and paying damages in court. We show that if prejudgment interest does not equal the promisor's subjective value from time (e.g. if the court uses the promisee's interest rate to fully compensate him), the promisor's breach decision will be distorted. When renegotiation is feasible this problem of excessive breach is mitigated, however asymmetric information about discount factors can lead to a renegotiation process that is doomed to fail. Punitive damages behave similarly. Specific performance without ancillary monetary awards always creates a pie for division between the parties. Ancillary awards for delay are unlikely to change this, but ancillary awards for partial breach make specific performance behave more like expectation damages, although to a lesser degree.

A Study on the Legal Explanation and Cases of Remedies for Breach of Contract by the Buyer under CISG

A Study on the Legal Explanation and Cases of Remedies for Breach of Contract by the Buyer under CISG

Bodum USA, Inc. v. La Cafetière, Inc. - Three Notes About Proving The Foreign Law, The Remedies for Breach of Contract and The Concept of Efficient Breach

This paper analyzes the ruling passed by the Seventh Circuit of the Court of Appeals of USA in the case Bodum USA, Inc. v. La Cafetiere, Inc. Several subjects are examined. Firstly, the interpretation of foreign Law by domestic Courts and how to prove the right meaning of it; secondly, the different remedies for breach of contract in the Common Law and in the Civil Law. Finally, this paper contains a critical review of the concept of efficient breach, following the thread of the concurring opinion of Judge Posner.

Equitable Remedies for Contractual Breach

I have been asked to provide an update on equitable remedies for breach of contract. Obviously, the dominant equitable remedy concerning breach of contract is specific performance; and in what follows I have focused upon that remedy. In addition, I have provided commentary on two related topics; one, the enforcement of keep open clauses; and two, the treatment of remedy stipulation clauses. I have not covered the enforcement of contracts by injunction. This presentation has come at an opportune time; as I am currently writing the second edition of my text on Equitable Remedies (Irwin Law) some of this material is drawn from those labours.

Remedies for Breach of Contract

A Breach of Contract occurs when a party thereto renounces his liability under it, or by his own act makes it impossible that he should perform his obligations under it or totally or partially fails to perform such obligations. A Breach of contract can be Anticipatory or Present.Breach of Contract leads to the infringement of the rights of the non-breaching party. Hence, his rights are needed to be restored. For this various remedies are available to the aggrieved party. Remedies available under Common Law are Damages. The main purpose of Damages is to enable the innocent party to receive Monetary Compensation. Damages are awarded as of right. They are calculated on the basis of looking at what the position of the plaintiff would have been if the Contract had been properly performed. Monetary Damages can be Compensatory, Consequential, Nominal or Liquidated. There is another group of remedies available to the aggrieved party which are known as Equitable Remedies. These are discretionary remedies at Equity and are only granted where damages are not an adequate remedy. Equitable Remedies include Recission, Restitution, Specific Performance, Injunction, Quantum Meruit, Anton Piller Order,etc.If the breaching party refuses to pay the Court ordered judgement, the court may issue Writ of Attachment or Writ of Garnishment to enforce the remedies.Section 73, 74 and 75 of the Indian Contract Act,1872 deals with remedies and damages for Breach of Contract.

The Effect of Time on Default Remedies for Breach of Contract

Among default remedies for breach of contract, expectation damages are believed superior to property rules such as specific performance since they allow the promisor to breach inefficient contracts when renegotiation is economically infeasible. We examine whether the promisor's ability to accurately determine when to breach is maintained when taking into account the value of time that distinguishes between immediate performance and paying damages in court. We show that if prejudgment interest does not equal the promisor's subjective value from time (e.g., if the court uses the promise's interest rate to fully compensate him), the promisor's breach decision will be distorted. When renegotiation is feasible this problem of excessive breach is mitigated, however asymmetric information about discount factors can lead to a renegotiation process that is doomed to fail. Punitive damages behave similarly. Specific performance without ancillary monetary awards always creates a pie for division between the parties. Ancillary awards for delay are unlikely to change this, but ancillary awards for partial breach make specific performance behave more like expectation damages, although to a lesser degree.

Comparing Remedies for Breach of Contract in Italian and English Law

This detailed comparative research seeks to clarify three particular remedies available in English and Italian Law from a breach of contract. These are termination of contract, performance and monetary relief. This research has followed a systematic comparative methodology and by doing so a comprehensive conclusion on remedies in Italian and English Law has been reached. This research has ensured a full analysis of these remedies by looking beyond English and Italian Law by comparing legal history, legal systems, legal culture, legal tradition and legal jurisprudence. This research concludes by showing the importance of remedies beyond contract law. Furthermore, it will also show why it is important to carry out comparative research with a clear methodology because as harmonisation of Laws intensifies it is important that the true function of a countries Law is not overlooked and lost within the legal terminology of another legal system.

Those crazy transaction costs: on the irrelevance of the equivalence between monetary damages and specific performance

The Coase theorem tells us that monetary damages and specific performance remedies for breach of contract have identical effects when transaction costs are zero. This has become a standard part of the literature on the economics of contract law. This note argues that the traditional view is somewhat misguided, as monetary damages and specific performance remedies are unnecessary in a zero transaction costs world. We go on to show how the presence of transaction costs impact the decisions of contracting parties as between the inclusion of liquidated damages clauses in contracts and resorting to litigation that could result in the application of either monetary damages or specific performance remedies.

COLLECTIVE ACTION AND CONTRACT RIGHTS

The possibility of collective action is essential to human freedom; yet, as Rousseau famously argued, individuals acting together allow themselves to depend on one another's choices and thereby jeopardize one another's freedom. These two facts jointly constitute what I call the normative problem of collective action. I argue that solving this problem is harder than it looks: it cannot be done merely in terms of moral obligations; indeed, it ultimately requires putting in place a full-fledged system of contract rights. The point has important ramifications for contract theory: the role that contract rights play in reconciling collective action and freedom turns out to be crucial to understanding how—and by whom—these rights can legitimately be enforced. It also explains why expectation damages should be the standard remedy for breach of contract.

Those Crazy Transaction Costs: On the Irrelevance of the Equivalence between Monetary Damages and Specific Performance

The Coase theorem tells us that monetary damages and specific performance remedies for breach of contract have identical effects when transaction costs are zero. This has become a standard part of the literature on the economics of contract law. This note argues that the traditional view is somewhat misguided, as monetary damages and specific performance remedies are unnecessary in a zero transaction costs world. We go on to show how the presence of transaction costs impact the decisions of contracting parties as between the inclusion of liquidated damages clauses in contracts and resorting to litigation that could result in the application of either monetary damages or specific performance remedies.

Revisiting Merits of Specific Performance:An Economic Analysis of Remedies for Breach of Contracts

Revisiting Merits of Specific Performance:An Economic Analysis of Remedies for Breach of Contracts

Remedies for breach of contract under the United Nations Convention on the International Sale of Goods

The article provides an overview of the remedies available under the United Nations Convention on the International Sale of Goods. A short introduction to the Convention is followed by an analysis of the structure and the basic features of the Convention’s remedies system. The article then deals with the various remedies in detail and presents them in their context. The circumstances in which a particular remedy will be available are explained, as are the requirements for the various remedies, and whether a party in breach of contract can prevent the other party’s use of the remedy. At the same time, the article emphasises the questions to which satisfactory answers have not yet been provided, and makes suggestions as to what the appropriate solutions should be. The article finishes with an appreciation of the Convention’s remedies system and some future prospects.

The Role of Remedies in The Relational Theory of Contract – A Preliminary Inquiry

The article addresses a puzzle. The puzzle is the neglect of the vast literature on relational and long-term contracts to explore a seemingly key aspect, namely: How, if at all, should the relational nature of a contractual transaction affect the basic rules governing the award of remedies for breach of contract? The authors argue that contrary to a widely held assumption, formal rules of remedy do play a significant role in the relational context. Furthermore, understanding the function of formal remedies in the relational context is crucial for the development of a full-scale relational theory of contract. In light of this basic assertion, a theoretical model of relational remedies is then introduced. The model offers a number of guiding principles, which should be taken into account by courts (or legislators) when awarding remedies for the violation of contractual rights in a relational setting.

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

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.

Implications of Breach Remedy and Renegotiation Design for Innovation and Capacity

Amanufacturer writes supply contracts with N buyers. Then, the buyers invest in innovation, and the manufacturer builds capacity. Finally, demand is realized, and the firms renegotiate the supply contracts to achieve an efficient allocation of capacity among the buyers. The court remedy for breach of contract (specific performance versus expectation damages) affects how the firms share the gain from renegotiation, and hence how the firms make investments ex ante. The firms may also engage in renegotiation design, inserting simple clauses into the supply contract to shape the outcome of renegotiation. For example, when a buyer grants a financial “hostage” to the manufacturer or is charged a per diem penalty for delay in bargaining, the manufacturer captures the gain from renegotiation. “Tradable options,” which grant buyers the right to trade capacity without intervention from the manufacturer, return the gain from renegotiation to the buyers. This paper proves that, under surprisingly general conditions, the firms can coordinate their investments with the simplest of supply contracts (fixed-quantity contracts). This may require renegotiation design, and certainly requires that the firms understand the breach remedy and set their contract parameters accordingly.

Remedies and Alternative Contracts

Contracts that contemplate alternative possible modes of performance, frequently referred to as alternative contracts, are common wherever written contracts are routinely used and relied upon. Nevertheless, courts in major legal systems have encountered enormous difficulty articulating a consistent and appropriate remedial principle to govern damages when such contracts are breached by the contracting party having the election to perform in alternative ways. This article analyzes this issue, and attempts to identify the most appropriate remedial principle for breaches of alternative contracts. To this end, Part I adopts a positive standpoint canvassing the rules governing remedies in a number of leading common law and civilian jurisdictions and illustrating in the process that remedies for breaches of alternative contracts are not consistently approached across jurisdictions. Indeed, even within several jurisdictions there are inconsistencies. Part II takes a normative approach to the question and illustrates that the most desirable remedial principle is a solution that has not yet been adopted for breaches of alternative contracts. Strikingly, we demonstrate that the ordinary common law remedy for breach of contract can be regarded as a special case of the most appropriate remedial approach for contracts with one or more modes of performance. Part III offers some thoughts regarding the possible reconciliation of Parts I and II, suggesting that existing rules may be normatively justified as the second-best in some circumstances. Part IV concludes with the suggestion that courts adopt the principle that the mode of performance that would be selected by the party with the election if specific performance were ordered be used for the purposes of assessing damages.

Comparative Remedies for Breach of Contract by Nili Cohen and Ewan McKendrick (eds)

Comparative Remedies for Breach of Contract by Nili Cohen and Ewan McKendrick (eds)

Legal Default Rules: The Case of Wrongful Discharge Laws

One of the most vexing public policy issues is the extent to which governments should intervene into private contractual relationships. The purpose of this paper is to explore both theoretically and empirically the extent to which such interventions may enhance efficiency. In the case of employment law, economists have traditionally taken the view that intervention, such as protection against wrongful discharge, simply undoes the original intent of the parties to the agreement. We find that both the good faith and the implied contract exceptions to employment at will may enhance employment in occupations characterized by high levels of investment. These results suggest that under the appropriate conditions courts may enhance the operation of a competitive market by setting appropriate default remedies for breach of contract.

Substantive and Jurisdictional Aspects of International Contract Remedies: A Comment on Avery Katz's “Remedies for Breach of Contract Under the CISG”

This work, which comments on Avery Katz's paper on “Remedies under the CISG” (that is the United Nation Convention on Contracts for the International Sale of Goods), focuses on the transactional design of contract remedies and on the legal and economic implications of contracts taking place in a transnational context, as opposed to a purely domestic context. The point is made that the most characterizing feature of international contracts governed by the CISG lies in the their multi-jurisdictional aspect, whereas other features, such as the mercantile character and the long-distance shipment, although relevant in the concrete assessment of transaction costs, do not significantly differentiate international contracts vis-à-vis domestic ones. In fact, the multi-jurisdictional aspect of international contracts justifies the adoption of default rules on remedies different from those applicable to domestic contracts not only with respect to contract avoidance, but also with respect to specific performance and monetary remedies.

Remedies for Breach of Contract Under the CISG

In this essay, I survey the three main remedial categories of the Convention on the International Sale of Goods (CISG) [specific performance, money damages, and goods-oriented remedies such as rejection and cure] from the vantage point of the economic literature on contract remedies, and discuss whether the rules set by the CISG are economically suitable for the particular transactions it governs—that is, long-distance and cross-border transactions, which are characterized by a different configuration of relative transaction costs than purely domestic exchanges. The central theoretical premise of the essay that is that while the economically optimal arrangement with respect to contract remedies is a second-best matter about which it is difficult to generalize, it is possible to draw some distinctions between long-distance and short-distance transactions and between in-border and cross-border transactions, and to develop generalizations about which remedies are relatively best suited to which contracts. A subsidiary premise is that CISG remedial rules are only default rules; and that private parties engaging in these transactions can and should contract into the remedial arrangements that are best suited to their particular arrangements. At the end of the paper, I draw some comparisons to issues raised by the burgeoning practice of electronic contracting.