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.

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