This book analyzes the conflict that emerges between parties after a breach of contract and how different legal remedies can best reduce conflict. Causes for conflict include equity, efficiency, and ethical reasons that parties might consider and use to blame the other or to justify breach. In the end, if not resolved through apologies or renegotiation, conflict leads to aggrievement and behavioral reactions in form of retaliation by the victim against the promisor in breach.
The book provides empirical evidence from laboratory experiments for how individuals react to perceived wrongful acts such as breach of contract and for the function of legal remedies to reduce retaliation by disappointed promisees in providing them compensation. It reveals how the inequality in the outcome, and not the inefficiency of breach of contract, causes aggrievement and retaliation by victims. The book concludes with a comparative law and economic analysis of remedies for breach of contract adopted in different leading jurisdictions, with important normative implications for the American insistence on expectation damages, the French expansion of specific performance with "astreinte", the German junction of specific performance, expectation damages, and disgorgement damages, and the British timid acceptance of partial disgorgement damages.
The book will appeal to scholars, researchers, and students of economics and law, interested in a better understanding of remedies for breach of contract.
Author(s): Sergio Mittlaender
Series: International Law and Economics
Publisher: Springer
Year: 2022
Language: English
Pages: 240
City: Cham
Foreword
Acknowledgements
List of Legal Materials Cited
American Case Law
British Case Law
Contents
1 Introduction
1.1 Objective
1.2 Research Questions
1.3 Outline
2 Theories of Contract and Contract Law
2.1 Introduction
2.1.1 The Legal Concept of Contract in Common and Civil Law Systems
2.1.2 Legal Enforcement of Contracts in Common and Civil Law Systems
2.2 Promissory Theories
2.3 Reliance Theories
2.4 Economic Theories
2.4.1 Anticipation of Opportunism and the Protection of the Restitution Interest
2.4.2 Loss of Reliance Investments and the Protection of the Reliance Interest
2.4.3 The Theory of Efficient Breach and the Protection of the Expectation Interest
2.4.4 The Role of Compensatory Remedies in Economic Theories
2.5 Conclusion
3 Disagreement, Conflict, and Retaliation in Breach of Contract
3.1 Introduction
3.2 Contractual Disputes and the Incompleteness of Contracts
3.3 Disagreement on the Moral Value of Breach
3.4 Disagreement on the Harmful Consequences of Breach
3.5 Cognitive Biases that Facilitate Disagreement
3.6 Retaliation to Perceived Wrong as the Product of Disagreement
3.7 Conclusion
4 Reciprocity and Legal Relief in Breach of Contract
4.1 Introduction
4.2 Retaliation and Punishment in Experiments
4.2.1 Retaliation in Experimental Games
4.2.2 Retaliation to Breach of Contract
4.3 Retaliation in the Contractual Model
4.4 Aggrievement from Breach and Possible Causes of Retaliation
4.4.1 Loss of Expected and Promised Gains
4.4.2 Inequality from Breach
4.4.3 Inefficiency from Breach
4.5 Social Welfare and Retaliation to Breach
4.5.1 Social Costs and Benefits of Retaliation under Perfect Legal Enforcement
4.5.2 Social Costs and Benefits of Retaliation under Imperfect Legal Enforcement
4.6 Conclusion
5 Retaliation, Remedies, and Contracts
5.1 Introduction
5.2 Partie’s Behavior Under Investigation and Related Literature
5.3 The Empirical Study
5.3.1 The Implemented Trade Game
5.3.2 Experimental Treatments
5.3.3 Strict Rational Choice Predictions
5.3.4 Alternative Hypotheses
5.3.5 Experimental Procedure
5.4 Results
5.4.1 Descriptive Results
5.4.2 Regression Results
5.4.3 Analysis of Social Welfare
5.5 Conclusion
6 Implications and Normative Analysis of Remedies for Breach
6.1 Introduction
6.2 Damages for Breach
6.2.1 The Protection of the Expectation Interest in Common Law and Civil Law Systems
6.2.2 Social Welfare Under Expectation Damages
6.2.3 The Protection of the Disgorgement Interest in Common Law and Civil Law Systems
6.2.4 Social Welfare Under Disgorgement Damages in the Absence of Renegotiation
6.2.5 Social Welfare Under Disgorgement Damages in the Presence of Renegotiation
6.3 Specific Performance
6.3.1 Specific Performance in Common and Civil Law Systems
6.3.2 Limits of a Claim to Specific Performance
6.3.3 Social Welfare Under Specific Performance in the Absence of Renegotiation
6.3.4 Social Welfare Under Specific Performance in the Presence of Renegotiation
6.4 Normative Analysis
6.4.1 The American Insistence on Expectation Damages
6.4.2 The French Expansion of Specific Performance with Astreintes
6.4.3 The German Junction of Specific Performance, Expectation, and Disgorgement Damages
6.4.4 The British Acceptance of Partial Disgorgement (Hypothetical Bargain Damages)
6.5 Conclusion
7 Conclusion
Bibliography
