| SOURCE | POSITION | THESIS | ARGUMENT STRUCTURE | COMMENTARY |
| Alan Schwartz & Robert E Scott, “Contract Theory and the Limits of Contract Law” (2003) 113:3 Yale LJ 541. | A pluralistic (but mostly efficiency based) methodological clarification. | Contract law must be sensitive to the nature of contractual relations and how fairness differs. Efficiency theories, for one, indeed apply to contracts between firms and looks at what contract laws best fit relation between firms. | “A transaction involves a seller (whether of goods or services) and a buyer. Parties to transactions can be partitioned into individuals and firms. This yields four transactional categories: (1) A firm sells to another firm, (2) an individual sells to another individual, (3) a firm sells to an individual, and (4) an individual sells to a firm.” (544) If we take seriously what kind of laws firms want, mandatory rules often undercut their aims. | While this paper is highly influential, it is not directly relevant for expectation damages. Its ingenious move is narrowing the scope of contracts to commercial firms so efficiency can come to the fore (and other concerns of obligations can be sectioned off to non-commercial entities). What might be interesting to think about is how the Hegelian view of contracts might treat these categories. The authors here broadly categorize Hegelian rights-based theories under autonomy theories. Are the property relations the same for firms? The authors’ focus on firms seems to make contract law disjointed (in a way that the rights-based views do not). |
| Nathan B Oman, “Markets as a Moral Foundation for Contract Law” (2012) 98:1 Iowa L Rev 183. | A further critique of economic theories; an argument for a pluralistic, promissory theory of contracts. | “My thesis is that contract law exists primarily to support markets and that the moral and political value of markets as a social institution undergirds its justification.” (187) | Promise-based views need to incorporate markets into their theory. The author claims to provide a justification of the “good of markets,” understood in three ways: “reinforcing a liberal political order,” generating “social goods,” and promoting relational virtues. (187) Promissory obligations are instrumentally good for promoting markets, and contracts orders the legal structure of markets, so of course contracts will reflect promissory obligations. | The author ties contracts to the promotion of markets, then provides a moral analysis of markets. This is a unique spin, but it takes away a lot of the deontological force away from promises by making promises instrumental for markets. |
| Randy E Barnett, “Contracts is Not Promise; Contract is Consent” (2012) 45:3 Suffolk UL Rev 647. | A modification to promissory views (mainly, Fried): the author suggests consent and “public” morality as the basis of contracts. | Fried’s promissory theory cannot account for the objective theory of assent and cannot account for default rules, but consent can explain these features. | On Fried’s view, subjective agreement between parties can be idiosyncratic, but consent looks at the objective relation. Second, “gap-filling” (default) rules are awkward to think of as a promise, rather they are better put in terms of a “manifestation of intention to be legally bound,” or consent (662). | Tier 2 This builds on the author’s previous influential paper (1986) where the author notes that morality-based theories need a broad notion of consent in order to capture all the elements of contract law. Here, the author makes explicit the comparison between the limited scope of promises and the larger scope of consent. This seems like a form of the rights-based view. |
| Melvin A Eisenberg & Brett H McDonnell, “Expectation Damages and the Theory of Overreliance” (2002) 54:5 Hastings LJ 1335. | Economics approach to defending expectation damages; in-house clarification on the theory of overreliance | A widely held assumption is that expectation damages provide inefficient incentives – because of overreliance – is generally untrue. | The question and issue Overreliance is contingent upon institutional considerations which are unlikely to occur; in the remaining cases of overreliance, expectation measure does not insure a promisee’s reliance and related modification to the expectation measure is unnecessary. | This paper vindicates the economic approach to expectation damages by dispelling the problem of overreliance. There is a nice discussion of the concept of reliance and this builds into an explication of the considerations from the buyer’s and seller’s points of view. |
| Tess Wilkinson-Ryan, “Do Liquidated Damages Encourage Breach – A Psychological Experiment” (2010) 108:5 Mich L Rev 633. | Empirical study on breaching behavior. | Moral judgments affect breaching behavior, as demonstrated by the preference to breach in contracts with liquidated-damages clauses. | Contrary to economists, people are not wealth-maximizers, rather their behavior is sensitive to incomplete contracts and sanctions. Experiments show that liquidated-damage clauses induce the belief that breach is less immoral and thereby encourages breaching behavior. | This paper may support Hegel’s idea that contracts separate the value from the material thing by suggesting that people’s decision procedure already works like this. The author has numerous papers in this area of experimental jurisprudence, notably “Breach Is For Suckers” (2010) and “Moral Judgment and Moral Heuristics in Breach of Contract” (2009). |
| Steven Thel & Peter Siegelman, “Wilfulness versus Expectation: A Promise-Based Defense of Wilfull Breach Doctrine” (2009) 107:8 Mich L Rev 1517. | Doctrinal investigation into willful breach. | The relevance of willfulness for courts is not to pick a more generous definition of the promisee’s expectations, rather it is to deprive the promisor of incentives to breach and grant the promise full expectation. | A promisee’s expectation interests seem to have little conceptual connection to the willfulness of breach by a promisor, yet courts often take willfulness into account. Willful breach doctrine is best understood as a screen for breaches with no benefit to the promisor (and perhaps no net benefit to the parties). | This paper takes expectation damage measures for granted (although there are some suggestions for supercompensatory remedies) and tries to find a coherent fit for the willful breach doctrine. Moreover, it also largely silent on cases of efficient breach. |
| Richard Craswell, “Promises and Prices” (2012) 45:3 Suffolk UL Rev 735. | Critique of non-economic approaches; survey of economists’ and philosophers’ approaches, particularly with respect to how they deal with pricing. | “Philosophers,” or the broad category of non-economic approaches, often omit the significance of pricing in their analysis, so it seems the economists’ approach is more complete. | The discussion on “price” is focused on price effects or the normative impact pricing has on contracting parties. The significance of pricing can be overlooked by the methodological approaches of non-economist (philosophers), notably in impermissible choices, default rules, tacit understandings, deductive logic, entailments of promises, scope of contract law, impermissible rationales, and cultural effects. | This paper is very interesting and raises a lot of important questions, but it does not provide a sustained analysis of one particular area of weakness by the non-economist. Rather it opts for breadth and covers a large range of how economists and philosophers think differently. |
| Richard RW Brooks, “The Efficient Performance Hypothesis” (2006) 116:3 Yale LJ 568. | Economic approach to specific performance; modification informed by moral intuitions | Promisee should be given the power to weigh costs and benefits of performance. This is more consistent with moral intuitions while remaining efficient. | “Perform or pay” describes the economic choices and not the legal character (i.e., the power vs the right), economic efficiency is not the foundation for the disjunctive duty in law. A look into contract doctrine reveals how courts craft remedies. A framework can be developed in terms of enforcement, efficiency, and distribution. Using this framework, we can arrive at the conclusion that efficiency and moral intuitions can be satisfied by giving promisee’s the power to weigh costs/benefits. | There is an interesting look into separating the rules courts use (for contract remedies) and the decision procedure to choose a rule (or a combination of rules). The author argues that the court is trying to “realize the equivalent of some counterfactual state.” (p 578) Generally, this is a strong economic argument for specific performance that takes morality into consideration. More specifically, if, all things equal, performance and breach are equally efficient, then performance is preferable given moral considerations. |
| Robin Kar, “Contract as Empowerment” (2016) 83:2 U Chicago L Rev 759. | A theory of contract based on empowerment (and not efficiency or morality based). | Contract as empowerment “has interpretive advantages over competing theories of contract.” (761) | The paper starts by unpacking the empowerment view. The interpretive advantages of contract as empowerment are in expectation damages, consideration, and the intention of parties. | Contract as empowerment is a fascinating and intuitive starting point. The discussion on expectation damages (starting on 785) is based on which remedy is more empowering. The author also replies to the idea that specific performance or punitive damages might be more empowering (792), but the argument becomes a bit muddy at this point. |
| Charles J Goetz & Robert E Scott, “Liquidated Damages, Penalties and the Just Compensation Principle: Some Notes on an Enforcement Model and a Theory of Efficient Breach” (1977) 77:4 Colurn L Rev 554. | Economic-based criticism of penalty doctrine and in favor of penal damages. | The current rationale behind the penalty doctrine – namely, inefficiently overcompensating the non-breaching party – it wrong and results in unfair remedies by failing to account for procedural costs. | Penalties can be useful ways for parties to negotiate and protect from breach, but the current penalty rules constrain this process and make it inefficient. This is seen in cases of idiosyncratic losses where expectation damages are often inadequate. | The focus of this paper is more on penal damages than expectation damages. It is nevertheless interesting to think about the disjunctive obligation (to perform or pay) with respect to penalties. What is a Hegelian view of penal damages? |
| Edward Yorio, “In Defense of Money Damages for Breach of Contract” (1982) 82:7 Colurn L Rev 1365. | A response to advocates of specific performance. | Despite popular issues (e.g. undercompensation), both morality and efficiency support the claim for money damages as the default rule due to its flexibility and responsiveness as a remedy. | This paper responds specific performance (mainly, Schwartz 1979) arguments from both the moral and economic camps. The author notes that a more attenuated form of money damages can account for the purported gaps that specific performance arguments claim to fill. Further, specific performance is less satisfactory than money damages in terms of fairness and efficiency. | This generally buttresses the case for expectation damages, but it is more about vindicating money damages from the suggestion that specific performance is more fair and more efficient. |
| Yuval Feldman & Doron Teichman, “Are All Contractual Obligations Created Equal” (2011) 100:1 Geo LJ 5. | A critique of instrumental (generally understood as economic) views of disjunction obligations by an empirical investigation into individual’s decisions and motivations. | Three experimental surveys show that people are motivated by non-instrumental forces (e.g. morality), and this undercuts the economic analysis of contracts. | Participants given efficient breach scenarios were sensitive to things like uncertainty of paying damages and the form of contract. So, economic incentives are not the only variable for determining breach and performance. | Tier 2 The disjunctive is looked at in terms of “options” to perform or breach. Experimental jurisprudence is useful in looking at individual attitudes towards breach, but it does not clarify what the obligations are in contracts. Moreover, as many economists point out, their views on efficient breach are based on models, so one must accept their starting points. These authors outright reject these starting points, then provide an empirical justification – in this respect, they seem to be talking past each other. |
| Charles Fried, “The Convergence of Contract and Promise” (2007) 120 Harvard L Rev Forum 1. | A response by Fried to Shiffrin; an in-house discussion on the promissory view. | Expectation damages and mitigation are consistent with promissory morality. | Fried disagrees with Shiffrin on specific performance and mitigation. Friend suggests expectation damages fills the gap for a lack of explicit bargain. He further suggests expanding morality from promises to include a duty to rescue. | The picture of morality Fried suggests is a bit puzzling, especially when he speaks about normative economics furthering similar ends to morality (see p 9). |
| Andrew S Gold, “A Moral Rights Theory of Private Law” (2011) 52:6 Wm & Mary L Rev 1873. | A rights-based account of private law, primarily responding to corrective justice and civil recourse theories. | The morality of rights has to do with the legitimate use of coercion. The state enforces these rights through a private right of action, and this model helps us understand elements of private law. | The author starts with a number of issues for the corrective justice and civil recourse approach. Then the author outlines the moral rights approach on an abstract level and elaborate on how it addresses the issues of the other approaches. The second half of the paper then tries to spell out the application of the rights approach for legal theory and legal doctrines. | What is particularly interesting is the incorporation of political theory and tying in ideas of social contract into an account of private law. There is also a clear section on methodology. |
| Peter Linzer, “On the Amorality of Contract -Remedies Efficiency, Equity, and the Second Restatement” (1981) 81:1 Columba L Rev 111-139. | A morality-based approach for specific performance. | A broader understanding of efficiency supports morality-based approaches to contracts. | The author makes an early distinction between commercial and noncommercial transactions, then argues that remedies need to be sensitive to this distinction. More specifically, in a noncommercial setting, specific performance should be liberally applied. | Tier 2 This is an important paper that is in the general camp of Fried and Shiffrin. One crucial difference, however, seems to be the concession for efficient breach in commercial settings. |
| Nathan B Oman, “Failure of Economic Interpretations of the Law of Contract Damages” (2007) 64:3 Wash & Lee L Rev 829. | A critique of economic theories of contract in favor of a pluralistic theory. | “Economic accounts of the current doctrine governing contract damages have failed, and the nature of that failure places limits on the role of economics in an integrated theory of contract law.” (832) | Economic theories cannot account for the “bilateralism” of contract law. The bilateralism of explains why overreliance is such a problem for economic theories: simply, it fails as a complete theory for contracts. We need an alternative that places autonomy in the center and uses efficiency as a guide to doctrine. | The author makes a compelling case for why damages must go to the injured party rather than the state – it does seem like an issue for economic theories, and an advantage for promissory and rights-based theories. The author covers their bases by address the minimal scope of their argument, noting that the “failure of economics as an interpretive theory is trivial.” (p 861) |
| Eric Posner, “Economic Analysis of Contract Law after Three Decades: Success or Failure?” (2003) 112 Yale LJ 829. | A critique of the normative shortcomings of economic theories. | “This Essay has two purposes: to document the failures of economic models to explain contract law or to justify reform, and to provide an explanation for these failures. The explanation centers on the difficulty of developing a model of contractual behavior that can be tested and that does not make unreasonable assumptions about the cognitive abilities of contractual parties.” (830) | The author notes that this article is merely a critique and does not purport any normative alternative. This is strictly doctrinal and looks at how economics fails to make sense of contractual doctrines. | What is notable here is Part III’s discussion on incomplete contracts and the economists’ solution. The author suggests economic theories are on their “way out,” and this conclusion seems to hold in current day. |
| Avery Katz, “Virtue Ethics and Efficient Breach” (2012) 45:3 Suffolk UL Rev 777. | A critique of moral argument against efficient breach and a proposal for a new kind of moral argument (based on virtue ethics). | “It argues that the standard deontological objections to efficient breach do not substantially undermine its basic analysis, because they can generally be addressed by reinterpreting or revising the underlying contract so that paying a money substitute in lieu of specific performance is explicitly authorized.” (779) | This article sketches the current views on efficient breach and categorizes them into the three main normative ethical theories. The author then suggests that, while intuitions may clash, most would not take efficient breach as a virtue. | This article puts a new line of arguments onto the table: “aretaic” or virtue based. |
| Charles J Goetz & Robert E Scott, “Enforcing Promises: An Examination of the Basis of Contract” (1980) 89:7 Yale LJ 1261. | A doctrinal analysis of contracts that pushes in the direction of utility/social welfare (but not an economic theory). | Contract theory needs to take a closer look at which doctrines yield the optimal social benefit with respect to the benefits and harms of enforcing some promises over others. | The author is interested in contracts as a legally enforceable promise and how the rest of contract law doctrine can make sense of this. The author further suggests that social welfare is the guiding principle. There is an important separation of the benefits of performance and the harm of breach for the calculus of social welfare. | This is a very detailed doctrinal account. There is a brief discussion of the expectation damage measure (starting on 1265). There is a development of Fuller & Perdue’s views (1284) from an ideal standpoint (i.e. perfect measurement and no transaction costs), then looks at it from a more practical standpoint (1288). |
| Nathan B Oman, “Consent to Retaliation: A Civil Recourse Theory of Contractual Liability” (2011) 96:2 Iowa L Rev 529. | An interpretive theory of contracts understood as consent to retaliate. | “This Article argues in favor of a simpler, rawer claim: contractual liability consists of consent to retaliation in the event of breach.” (531) | The author looks at the issue of accounting for contractual liability and rejects the approach that there are existing promissory duties. Rather, civil recourse empowers injured parties to acquire remedies. | There is a fascinating move in the argument that suggests the threat of retaliation against the breaching party is a better solution than third-party enforcement of obligations. Another notable point is that the theory views expectation damages as a limit on retaliation rather than an incentive to perform or compensate for the value of the promise; here, the theory supposedly better explains deviations from the expectation measure better than the alternatives. |
| Menachem Mautner, “A Justice Perspective of Contract Law: How Contract Law Allocates Entitlements” (1990) 10 Tel Aviv U Studies in L 239. | A normative theory of contracts as a tool for distributive justice and resource allocation. | “My major concern in this paper will be with thejustice aspects of contract law in its role as a normative system governing the use of contract as an instrument. I shall offer a normative model of thejustice principles that lie at the basis of many contract law doctrines.” (240) | This article looks to the works of Nozick and Rawls, and then builds a view of contracts based on “desert” (which is understood as a criterion of distributing resources, along with “equality” and “need”). (245) | This article has received almost no scholarly attention, but it makes an interesting claim about the instrumental use of contracts for realizing claims of distributive justice. It also suggests efficiency can converge with the goals of justice. This seems like a rigorous piece of scholarship, but why was it ignored? |
| Barry E Adler, “Efficient Breach Theory through the Looking Glass” (2008) 83:6 NYUL Rev 1679. | A doctrinal look into negative damages, which helps us understand the expectation remedy. | “The objective of this Article is to explore the potential benefits and costs of an award to the party in breach and to determine whether a justification for the current law exists within the framework of efficiency theory. In addition, the Article sheds new light on express contractual alternatives to expectation damages as well as on the mitigation doctrine.” (1681) | “Doctrinally, a party who breaches cannot sue for damages on the contract and thus cannot collect any benefit conferred by the breach. One might ask why this should be so. Such a suit surely would offend those who find it immoral for a person to profit from her broken promise. But efficient breach theory is amoral by nature.” (1681) | Negative damages have an interesting link to the morality of cooperative behavior and disclosing breach for the benefit of the other party. |
| Marco J Jimenez, “The Value of a Promise: A Utilitarian Approach to Contract Law Remedies” (2008) 56:1 UCLA L Rev 59. | A critique of economic approaches to efficient breach from a utilitarian lens. | “And because its foundations are utilitarian, the use of L&E-rather than utilitarianism-to determine contract law remedies often results in an misallocation of resources, which is not only anathema to wealth maximization theory, but should cause us to reject this approach outright when applied to contract law remedies on efficiency grounds alone.” (61) | The question the author focuses is on is whether efficient breach can be defended on utilitarian grounds (rather than criticizing the idea of wealth maximizing). Surprisingly, the author further suggests that utilitarian theories have better application to law over economic theories. | It is hard to grasp exactly where economic theories cannot incorporate utilitarianism into their views. The author seems to suggest that utility and wealth are distinct, and utility is increased is every contract whereas wealth is not; however, it is not clear why the economist would need to make this distinction. There is an interesting claim about expectation damages (107) on the endowment effect and also the marginal value of the dollar to less wealthy parties. The subjective value might not translate into dollar amounts. |
| Thomas S Ulen, “The Efficiency of Specific Performance: Toward a Unified Theory of Contract Remedies” (1984) 83:2 Mich L Rev 341. | An efficiency-based argument for specific performance over money damages. | “If specific performance is the routine remedy for breach, there are strong reasons for believing, first, that more mutually beneficial exchanges of promises will be concluded in the future that they will be exchanged at a lower cost than under any other con- tract remedy, and, second, that under specific performance post- breach adjustments to all contracts will be resolved in a manner most likely to lead to the promise being concluded in favor of the party who puts the highest value on the completed performance and at a lower cost than under any alternative.” (343-344) | This article looks at efficiency breach and the economic arguments surrounding it. It then shifts the advantages of specific performance, and how it might be more efficient in formation and post-breach negotiation. The crux is that economic analyses need to follow transaction costs for determining remedies (factually, parties often have low transaction costs, so specific performance should be the remedy). | The main upshot of this article is that awarding specific performance will protect the innocent party’s future expectations and this leads to an overall efficient result. This is an interesting economic approach to protecting the innocent party and perhaps trying to square efficiency with moral intuitions. |
| Richard Craswell, “Contract Remedies, Renegotiation, and the Theory of Efficient Breach” (1988) 61:3 S Cal L Rev 629. | A critique of efficient breach arguments based on the aims of contract remedies with respect to compensation. | “Writers who for noneconomic reasons favor remedies that punish breachers, for example, invariably assert that their remedies are not inconsistent with economic efficiency because the parties can always renegotiate to permit an efficient breach. This Article attempts to remedy that error by drawing together the other contractual issues that economics can illuminate, and by showing that these effects do not disappear if ex post renegotiation is costless.” (631) | “Part I describes the early analysis of the perform-or-breach decision, and explains its emphasis on renegotiation costs. The remaining parts describe the other effects of contract remedies, and show that these effects do not depend on the ease of ex post renegotiation.’ | The author poses an issue for both economic and non-economic theories that appeal to efficient breach. The efficiency of a remedy does not depend “solely on ex post negotiation costs,” but a variety of other facts. |
Philo-so-fun 