Fault in American Contract Law

Half-title......Page 3
Title......Page 5
Copyright......Page 6
CONTENTS......Page 9
CONTRIBUTORS......Page 11
Introduction......Page 13
I. A Positive Account......Page 14
II. Normative and Historical Accounts......Page 16
A. Willful Breach......Page 17
IV. The Morality of Breach......Page 19
Conclusion......Page 20
ACKNOWLEDGMENT......Page 23
PART I: THE CASE FOR STRICT LIABILITY......Page 25
Introduction......Page 44
A. The Promisor’s Behavior: The Willful Breach Doctrine......Page 46
B. The Promisee’s Behavior: The Mitigation Principle......Page 50
C. Summary......Page 51
A. Contract Design and the Choice Between Rules and Standards......Page 52
B. Rules v. Standards and the Choice Between Formal and Informal Enforcement......Page 54
C. The Evidence......Page 56
Conclusion......Page 58
Introduction......Page 59
A. The Most Important Nuances in Civil Law Systems......Page 61
B. Some Striking Nuances in Common Law Systems......Page 64
C. Particular Refi nement in European Investment Services Law......Page 66
A. Ethics or Economics – The Wrong Question......Page 67
B. Party and Market Expectation as Guidelines......Page 68
C. Promise of Results or Promise of Best Efforts – The Core Criteria......Page 69
D. Fault, Foreseeability, and Other “Softeners” of Strict Liability......Page 72
Conclusion......Page 73
I.......Page 27
II.......Page 41
PART II: THE CASE FOR FAULT......Page 75
FOUR: How Fault Shapes Contract Law......Page 77
I. Fault and Uncertain Contractual Intent......Page 78
II. An Expanded Law and Economics Approach to Fault......Page 80
III. A Fault-Based Approach to Contract Damages......Page 85
Conclusion......Page 91
Introduction......Page 93
A. A Model......Page 94
B. Fault......Page 95
C. A Comparison: Strict Liability Versus Negligence......Page 96
II. Doctrine......Page 98
A. Impossibility/Impracticability......Page 99
B. Reasonable or Substantial Performance......Page 100
C. Good Faith and Best Efforts......Page 102
D. Interpretation/Implied Terms......Page 103
E. Conditions......Page 104
F. Damages......Page 105
Introduction......Page 106
I. Unconscionability......Page 107
A. Markets......Page 109
B. Moral Fault......Page 110
II. Unexpected Circumstances......Page 111
III. Interpretation......Page 113
IV. Mistake......Page 115
B. The Nonmistaken Party Had Reason to Know of the Mistaken Party’s Mechanical Error......Page 116
C. Cases in Which the Nonmistaken Party Neither Knew nor Had Reason to Know of the Mechanical Error......Page 117
V. Nonperformance......Page 118
Conclusion......Page 120
PART III: BETWEEN STRICT LIABILITY AND FAULT......Page 123
Introduction......Page 125
I. Modernizing Tort and Contract Around Fault......Page 126
II. Explaining the Fault Swap......Page 129
III. Products Liability and Fault at the Border Between Contract and Tort......Page 134
Conclusion......Page 141
Introduction: From Fault to Negligence – and Back......Page 142
I. Tort Law......Page 144
II. Moving the Tort-Contract Boundary: In Praise of Heterogeneity......Page 145
A. Coggs v. Bernard......Page 146
C. Siegel v. Spear and Comfort v. McGorkle......Page 150
D. Medical Malpractice, Occupier’s Liability, and Guest Statutes......Page 151
IV. Frustration and Impossibility......Page 152
Conclusion......Page 154
NINE: The Productive Tension Between Official and Unofficial Stories of Fault in Contract Law......Page 156
I. Official and Unofficial Stories Appear Th roughout Contract Doctrine......Page 159
II. Official and Unofficial Stories Make Theoretical Sense......Page 161
III. Civil Obligation’s Brain Is Contract and Its Heart Could Be Tort......Page 163
Conclusion......Page 167
PART IV: WILLFUL BREACH......Page 169
TEN: When Is a Willful Breach “Willful”? The Link Between Definitions and Damages......Page 171
I. Defining a “Willful” Breach......Page 172
A. Analogies in Criminal Law......Page 174
B. Lay Assessments of Culpability......Page 175
A. Defining a Negligence Regime......Page 177
C. The Demands that Negligence Makes of Courts......Page 179
III. The Analogy to Strict Liability......Page 180
A. The Cost of Excessive Awards Under Strict Liability......Page 181
B. Optimal Damages Under Strict Liability......Page 182
Conclusion......Page 184
ELEVEN: Willful Breach: An Efficient Screen for Efficient Breach......Page 185
I. Applying an Expectation Cap to the Contract-Market Differential......Page 188
II. Cost of Correction Versus Diminution in Value......Page 192
A. Three Variants on Jacob & Youngs......Page 193
B. Treatment by the Courts......Page 195
Conclusion......Page 197
A. The Puzzle......Page 198
C. An Information-Based Explanation......Page 200
A. The Model......Page 203
B. Informal Lessons from the Example......Page 207
C. The Efficiency of Supracompensatory Damages......Page 208
D. From Moral Hazard to Adverse Selection......Page 209
A. Overcompensatory Expectation Damages......Page 210
B. Tort Damages for Bad-Faith Breach......Page 211
Conclusion......Page 212
Introduction......Page 214
I. Expectation Damages and Willful Breach......Page 215
II. Willfulness, Material Breach, and Damages......Page 218
Conclusion......Page 227
PART V: COMPARATIVE FAULT......Page 229
Introduction......Page 231
A. Noncooperation......Page 232
B. Overreliance......Page 236
A. Setting the Stage......Page 237
B. Noncooperation......Page 238
1. When Should Avoiding Overreliance be the Default Rule?......Page 244
Conclusion......Page 246
Introduction......Page 247
A. The Effect of Stipulated Damages on the Nonbreaching Party......Page 249
B. The Effect of Stipulated Damages on the Breaching Party......Page 250
A. How Courts Encourage Parties to Stipulate......Page 252
B. Two Advantages of Stipulation: Knowledge and Mitigation......Page 254
C. Stipulation Th rough the Lens of Mitigation......Page 257
Conclusion......Page 259
Introduction......Page 261
I. Comparative Negligence and Mitigation in Contract Law Compared......Page 263
II. Comparative Negligence......Page 265
III. Mitigation......Page 268
IV. Reasonable Reliance......Page 270
V. Causation......Page 271
VI. Foreseeability......Page 272
VII. Explaining the Differences Between Anglo-American and Continental Europe Approaches......Page 273
Conclusion......Page 277
PART VI: THE MORALITY OF BREACH......Page 279
SEVENTEEN: Why Breach of Contract May Not Be Immoral Given the Incompleteness of Contracts......Page 281
A. Definition of Moral Behavior in a Contingency......Page 282
B. The Observed Incompleteness of Contracts......Page 283
D. The Nature of Obligations to Perform in Hypothetical Completely Detailed Contracts......Page 284
E. The Immorality or Morality of Breach When Contracts Are Incomplete Can Be Inferred from the Willingness of the Party in Breach to Pay Damages......Page 285
F. When Is Breach Immoral and When Is It Moral in Practice?......Page 287
A. The Nature of the Hypothetical Complete Contract......Page 288
B. Does the Hypothetical Complete Contract Provide an Appealing Moral Standard?......Page 289
C. The Idea that Performance Per Se Has Moral Importance......Page 290
D. The Choice Among Definitions of Moral Behavior in the Contractual Context......Page 291
Conclusion......Page 293
Introduction......Page 295
I. Promise De-moralized, Contract Moralized......Page 297
II. Contract and Promise: More on the Relationship......Page 300
III. The Harm Principle and Contract Law......Page 302
IV. Harm, Fault, and Remedies for Breach......Page 304
V. Fault and Institutional Harm......Page 308
Conclusion: Toward a Moral Law of Contract......Page 311
NINETEEN: Fault in Contracts: A Psychological Approach......Page 313
I. Breach as Moral Harm......Page 314
II. Breach and the Reference Profi t......Page 318
III. Moral Norms as Default Rules......Page 321
Conclusion......Page 326
CASE INDEX......Page 329
SUBJECT INDEX......Page 333