In the first issue of the Journal of Legal Analysis [updated link] (to which I devoted a previous post) I am particularly taken with Melvin Eisenberg‘s “Impossibility, Impracticability, and Frustration” (pdf). The abstract:

Three fundamental concepts underlie the principles that should govern unexpected-circumstances cases. (1) A contract consists not only of the writing in which it is partly embodied, but also includes, among other things, certain kinds of tacit assumptions. (2) These assumptions may be either event-centered or magnitude-centered. (3) The problems presented by unexpected-circumstances cases should be viewed in significant part through a remedial lens. The principles that rest on these concepts can be broadly summarized as follows. A shared nonevaluative tacit assumption that a given circumstance will persist, occur, or not occur during the contract time should provide a basis for judicial relief where the assumption would have affected the promisor’s obligations had it been made explicit. If the promisor was neither at fault for the occurrence of the unexpected circumstance, nor in control of the conditions that led to the occurrence, she should not be liable for expectation damages. The promisor should, however, be liable for restitutionary damages, because it would be unjust to allow the promisor to both be excused from performance and retain any benefits that she received under the contract.

Read More »

The most recent New York University Law Review (vol 83, number 6, December 2008) has two wonderful pieces about the Law of Contract, one relating to the old chestnut of efficient breach (a doctrine that has taken root in US law, but not elsewhere in the common law world), the other relating to the theoretical structure of the law’s approach to the subject.


Barry E. Adler Efficient Breach Theory Through the Looking Glass (pdf); here’s the abstract:

A party in breach of contract cannot sue the victim of breach to recover what would have been the victim’s loss on the contract. The doctrinal rationale is simple: A violator should not benefit from his violation. This rationale does not, however, provide an economic justification for the rule. Indeed, efficient breach theory is founded on the proposition that a breach of contract need not be met with reproach. Yet the prospect of recovery by the party in breach—that is, the prospect of negative damages—has received scant attention in the contracts literature. Close analysis reveals potential costs to disallowance of negative damages, particularly where a party with private information about the benefits of termination also has an incentive to continue under the contract.

Read More »