Misreading Oliver Wendell Holmes on efficient breach and tortious interference

Fordham Law Review

Volumn 68, Issue 4, 2000, Pages 1085-1106

  Perillo, Joseph M ^a  

^a NONE

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EID: 0034421255     PISSN: 0015704X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (151)

1. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 462 (1897). Holmes recognized that this statement did not account for the remedy of specific performance, but stated that "I hardly think it advisable to shape general theory from the exception." Id. He failed to note other legal sanctions that were still available in the early nineteenth century for breach of contract; for example, jail time for runaway indentured servants. See Robert J. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350- 1870, at 3-4 (1991). In England, imprisonment of breaching employees continued until the late nineteenth century. See generally Alfred Avins, Involuntary Servitude in British Commonwealth Law, 16 Int'l & Comp. L.Q. 29 (1967) (surveying the phenomenon in the United Kingdom of criminal enforcement of labor contracts until the late 1800's). Also, corporal punishment of apprentices and "menial" servants was permitted. See Esek Cowen, Treatise on the Civil Jurisdiction of a Justice of the Peace in the State of New York 193-94 (1821). Imprisonment for debt was frequent. See Richard Ford, Imprisonment for Debt, 25 Mich. L. Rev. 24, 29 (1926) ("The number of persons imprisoned [for debt in 1830] was 3,000 in Massachusetts, 10,000 in New York, 7,000 in Pennsylvania, and 3,000 in Maryland ...." (footnote omitted)). The law also provided that instead of imprisonment, "[p]oor debtors may by law be assigned in service, for the payments of their debts." 1 Zephaniah Swift, A System of the Laws of Connecticut 218 (Arno Press 1972) (1795). In other words, poor debtors were impressed into debt slavery.
2. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 462 (1897). Holmes recognized that this statement did not account for the remedy of specific performance, but stated that "I hardly think it advisable to shape general theory from the exception." Id. He failed to note other legal sanctions that were still available in the early nineteenth century for breach of contract; for example, jail time for runaway indentured servants. See Robert J. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350-1870, at 3-4 (1991). In England, imprisonment of breaching employees continued until the late nineteenth century. See generally Alfred Avins, Involuntary Servitude in British Commonwealth Law, 16 Int'l & Comp. L.Q. 29 (1967) (surveying the phenomenon in the United Kingdom of criminal enforcement of labor contracts until the late 1800's). Also, corporal punishment of apprentices and "menial" servants was permitted. See Esek Cowen, Treatise on the Civil Jurisdiction of a Justice of the Peace in the State of New York 193-94 (1821). Imprisonment for debt was frequent. See Richard Ford, Imprisonment for Debt, 25 Mich. L. Rev. 24, 29 (1926) ("The number of persons imprisoned [for debt in 1830] was 3,000 in Massachusetts, 10,000 in New York, 7,000 in Pennsylvania, and 3,000 in Maryland ...." (footnote omitted)). The law also provided that instead of imprisonment, "[p]oor debtors may by law be assigned in service, for the payments of their debts." 1 Zephaniah Swift, A System of the Laws of Connecticut 218 (Arno Press 1972) (1795). In other words, poor debtors were impressed into debt slavery.
3. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 462 (1897). Holmes recognized that this statement did not account for the remedy of specific performance, but stated that "I hardly think it advisable to shape general theory from the exception." Id. He failed to note other legal sanctions that were still available in the early nineteenth century for breach of contract; for example, jail time for runaway indentured servants. See Robert J. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350- 1870, at 3-4 (1991). In England, imprisonment of breaching employees continued until the late nineteenth century. See generally Alfred Avins, Involuntary Servitude in British Commonwealth Law, 16 Int'l & Comp. L.Q. 29 (1967) (surveying the phenomenon in the United Kingdom of criminal enforcement of labor contracts until the late 1800's). Also, corporal punishment of apprentices and "menial" servants was permitted. See Esek Cowen, Treatise on the Civil Jurisdiction of a Justice of the Peace in the State of New York 193-94 (1821). Imprisonment for debt was frequent. See Richard Ford, Imprisonment for Debt, 25 Mich. L. Rev. 24, 29 (1926) ("The number of persons imprisoned [for debt in 1830] was 3,000 in Massachusetts, 10,000 in New York, 7,000 in Pennsylvania, and 3,000 in Maryland ...." (footnote omitted)). The law also provided that instead of imprisonment, "[p]oor debtors may by law be assigned in service, for the payments of their debts." 1 Zephaniah Swift, A System of the Laws of Connecticut 218 (Arno Press 1972) (1795). In other words, poor debtors were impressed into debt slavery.
4. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 462 (1897). Holmes recognized that this statement did not account for the remedy of specific performance, but stated that "I hardly think it advisable to shape general theory from the exception." Id. He failed to note other legal sanctions that were still available in the early nineteenth century for breach of contract; for example, jail time for runaway indentured servants. See Robert J. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350- 1870, at 3-4 (1991). In England, imprisonment of breaching employees continued until the late nineteenth century. See generally Alfred Avins, Involuntary Servitude in British Commonwealth Law, 16 Int'l & Comp. L.Q. 29 (1967) (surveying the phenomenon in the United Kingdom of criminal enforcement of labor contracts until the late 1800's). Also, corporal punishment of apprentices and "menial" servants was permitted. See Esek Cowen, Treatise on the Civil Jurisdiction of a Justice of the Peace in the State of New York 193-94 (1821). Imprisonment for debt was frequent. See Richard Ford, Imprisonment for Debt, 25 Mich. L. Rev. 24, 29 (1926) ("The number of persons imprisoned [for debt in 1830] was 3,000 in Massachusetts, 10,000 in New York, 7,000 in Pennsylvania, and 3,000 in Maryland ...." (footnote omitted)). The law also provided that instead of imprisonment, "[p]oor debtors may by law be assigned in service, for the payments of their debts." 1 Zephaniah Swift, A System of the Laws of Connecticut 218 (Arno Press 1972) (1795). In other words, poor debtors were impressed into debt slavery.
5. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 462 (1897). Holmes recognized that this statement did not account for the remedy of specific performance, but stated that "I hardly think it advisable to shape general theory from the exception." Id. He failed to note other legal sanctions that were still available in the early nineteenth century for breach of contract; for example, jail time for runaway indentured servants. See Robert J. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350- 1870, at 3-4 (1991). In England, imprisonment of breaching employees continued until the late nineteenth century. See generally Alfred Avins, Involuntary Servitude in British Commonwealth Law, 16 Int'l & Comp. L.Q. 29 (1967) (surveying the phenomenon in the United Kingdom of criminal enforcement of labor contracts until the late 1800's). Also, corporal punishment of apprentices and "menial" servants was permitted. See Esek Cowen, Treatise on the Civil Jurisdiction of a Justice of the Peace in the State of New York 193-94 (1821). Imprisonment for debt was frequent. See Richard Ford, Imprisonment for Debt, 25 Mich. L. Rev. 24, 29 (1926) ("The number of persons imprisoned [for debt in 1830] was 3,000 in Massachusetts, 10,000 in New York, 7,000 in Pennsylvania, and 3,000 in Maryland ...." (footnote omitted)). The law also provided that instead of imprisonment, "[p]oor debtors may by law be assigned in service, for the payments of their debts." 1 Zephaniah Swift, A System of the Laws of Connecticut 218 (Arno Press 1972) (1795). In other words, poor debtors were impressed into debt slavery.
6. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 462 (1897). Holmes recognized that this statement did not account for the remedy of specific performance, but stated that "I hardly think it advisable to shape general theory from the exception." Id. He failed to note other legal sanctions that were still available in the early nineteenth century for breach of contract; for example, jail time for runaway indentured servants. See Robert J. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350- 1870, at 3-4 (1991). In England, imprisonment of breaching employees continued until the late nineteenth century. See generally Alfred Avins, Involuntary Servitude in British Commonwealth Law, 16 Int'l & Comp. L.Q. 29 (1967) (surveying the phenomenon in the United Kingdom of criminal enforcement of labor contracts until the late 1800's). Also, corporal punishment of apprentices and "menial" servants was permitted. See Esek Cowen, Treatise on the Civil Jurisdiction of a Justice of the Peace in the State of New York 193-94 (1821). Imprisonment for debt was frequent. See Richard Ford, Imprisonment for Debt, 25 Mich. L. Rev. 24, 29 (1926) ("The number of persons imprisoned [for debt in 1830] was 3,000 in Massachusetts, 10,000 in New York, 7,000 in Pennsylvania, and 3,000 in Maryland ...." (footnote omitted)). The law also provided that instead of imprisonment, "[p]oor debtors may by law be assigned in service, for the payments of their debts." 1 Zephaniah Swift, A System of the Laws of Connecticut 218 (Arno Press 1972) (1795). In other words, poor debtors were impressed into debt slavery.
7. Clark A. Remington, Intentional Interference with Contract and the Doctrine of Efficient Breach: Fine Tuning the Notion of the Contract Breacher as Wrongdoer, 47 Buff. L. Rev. 645, 647 (1999) (citing Holmes, supra note 1, at 462).
8. Remington, supra note 2, at 674.
9. 1 Holmes-Pollock Letters: The Correspondence of Mr. Justice Holmes and Sir Frederick Pollock, 1874-1932, at 177 n.2 (Mark DeWolfe Howe ed. 1941) (quoting Frederick Pollock, Contracts 192 n.K (8th ed. 1911)) [hereinafter Holmes-Pollock Letters]. Pollock criticized Holmes's view of contract - as he understood it - on other occasions as well. See, e.g., id. at 80 (discussing historical authorities that differed with Holmes's view of contracts) (letter of Sept. 17, 1897). More recently, Richard Epstein appears to read Holmes's "imperial" statement in the same way, but strongly disagrees with what he deems Holmes to have meant. See Richard A. Epstein, Torts 579-80 (1999). James P. Nehf, apparently reads Holmes the same way, but also with disapproval. See James P. Nehf, Contract Damages as Substitute for Full Performance, 32 Ind. L. Rev. 765, 765-66 (1999).
10. 1 Holmes-Pollock Letters: The Correspondence of Mr. Justice Holmes and Sir Frederick Pollock, 1874-1932, at 177 n.2 (Mark DeWolfe Howe ed. 1941) (quoting Frederick Pollock, Contracts 192 n.K (8th ed. 1911)) [hereinafter Holmes-Pollock Letters]. Pollock criticized Holmes's view of contract - as he understood it - on other occasions as well. See, e.g., id. at 80 (discussing historical authorities that differed with Holmes's view of contracts) (letter of Sept. 17, 1897). More recently, Richard Epstein appears to read Holmes's "imperial" statement in the same way, but strongly disagrees with what he deems Holmes to have meant. See Richard A. Epstein, Torts 579-80 (1999). James P. Nehf, apparently reads Holmes the same way, but also with disapproval. See James P. Nehf, Contract Damages as Substitute for Full Performance, 32 Ind. L. Rev. 765, 765-66 (1999).
11. 1 Holmes-Pollock Letters: The Correspondence of Mr. Justice Holmes and Sir Frederick Pollock, 1874-1932, at 177 n.2 (Mark DeWolfe Howe ed. 1941) (quoting Frederick Pollock, Contracts 192 n.K (8th ed. 1911)) [hereinafter Holmes-Pollock Letters]. Pollock criticized Holmes's view of contract - as he understood it - on other occasions as well. See, e.g., id. at 80 (discussing historical authorities that differed with Holmes's view of contracts) (letter of Sept. 17, 1897). More recently, Richard Epstein appears to read Holmes's "imperial" statement in the same way, but strongly disagrees with what he deems Holmes to have meant. See Richard A. Epstein, Torts 579-80 (1999). James P. Nehf, apparently reads Holmes the same way, but also with disapproval. See James P. Nehf, Contract Damages as Substitute for Full Performance, 32 Ind. L. Rev. 765, 765-66 (1999).
12. Nisi in Latin means "unless." Black's Law Dictionary 1047 (6th ed. 1990).
13. 1 Holmes-Pollock Letters, supra note 4, at 177 (letter of Mar. 12, 1911) (emphasis in original). In a similar vein, 17 years later, Holmes chided Pollock for falling victim to the persistence of the impression that I say that a man promises either X or to pay damages. I don't think a man promises to pay damages in contract any more than in tort. He commits an act that makes him liable for them if a certain event does not come to pass, just as his act in tort makes him liable simpliciter. 2 Holmes-Pollock Letters, supra note 4, at 233 (letter of Dec. 11, 1928). Holmes's passage previously quoted in the text was written in the past tense, as if he was writing history. But, here, the language is in the present tense. In an opinion for the United States Supreme Court, however, he had stated that "[t]he old law seems to have regarded it as technically in the election of the promisor to perform or to pay damages. Bromage v. Genning, 1 Roll. R. 368; Hubert v. Hart, 1 Vern. 133." Globe Ref. Co. v. Landa Cotton Oil Co., 190 U.S. 540, 543 (1903) (first emphasis added). In the same opinion, he wrote, "[w]hen a man commits a tort he incurs by force of the law a liability to damages, measured by certain rules. When a man makes a contract he incurs by force of the law a liability to damages, unless a certain promised event comes to pass." Id.
14. "The word is derived from the Latin 'tortus' or 'twisted.' The metaphor is apparent: a tort is conduct which is twisted, or crooked . . . . 'Tort' is found in the French language, and was at one time in common use in English as a general synonym for 'wrong.'" W. Page Keeton et al., Prosser and Keeton on The Law of Torts § 1, at 2 (5th ed. 1984) (footnotes omitted). In law French, the word is used in such titles as Britton's chapter, De plusours torts. See Tort, in Oxford English Dictionary 275 (2d ed. 1989) (citing Britton, I. 77). Blackstone divided his discussion of contracts under two headings: "Wrongs," 3 William Blackstone, Commentaries on the Laws of England ch. 9 (1768), and "Rights," 2 William Blackstone, Commentaries on the Laws of England ch. 13 (1766).
15. Thus, the Restatement quite properly, even under Holmes's analysis, refers to the breaching party as a "wrongdoer." Restatement (Second) of Torts § 766 cmt. v (1979). But see Remington, supra note 2, at 646 ("The view of breacher as wrongdoer is quite inconsistent with modern contract law.").
16. In P.P. Emory Mfg. v. Columbia Smelting & Refining Works, 60 N.E. 377 (Mass. 1901), Holmes, referring to a complaint that the non-breaching party failed to mitigate damages caused by an anticipatory repudiation, stated that "[u]ntil the moment when a refusal to perform is a wrong, he has a right to expect that when the time comes a wrong will not be done." Id. at 378 (emphasis added). Note that the term "wrong" is repeated twice in this short quotation.
17. See, e.g., Chicago, Milwaukee & St. Paul Ry. Co. v. McCaull-Dinsmore Co., 253 U.S. 97, 100 (1920) ("The rule of the common law is not an arbitrary fiat but an embodiment of the plain fact that the actual loss caused by breach of a contract is the loss of what the contractee would have had if the contract had been performed . . . ."); see also St. Louis Dressed Beef & Provision Co. v. Maryland Cas. Co., 201 U.S. 173, 180-83 (1906) (explaining the propriety of expectancy damages in an action for breach); Speirs v. Union Drop-Forge Co., 61 N.E. 825, 826 (Mass. 1901) (affirming an award of expectancy damages even though plaintiff "could not prove with prophetic certainty what the exact course of performance would have been").
18. See Obery v. Lander, 60 N.E. 378, 378 (Mass. 1901).
19. Quincy 99 (Province of Mass. Bay 1765), reprinted in 1 Am. Dec. 1 (1910).
20. See id. at 99-100 n.2.
21. See id. at 100-01 & n.3.
22. See id. at 99-100.
23. See id. at 103.
24. See id. at 102.
25. Id. at 103.
26. Otis, on the behalf of Mrs. Hanlon, argued in vain that "Hanlon never bought or paid for a single Rag of his Wife's Cloaths, but that she brought all with her at the Marriage." Id. at 102. Of course, a woman's property no longer becomes her husband's by virtue of marriage. Also, a judgment debtor's entitlement to keep necessaries has expanded.
27. On the theme of Holmes's positivism, see Albert W. Alschuler, The Descending Trail: Holmes' Path of the Law One Hundred Years Later, 49 Fla. L. Rev. 353 (1997).
28. The governing precedent was Hardisty and Barney, 90 Eng. Rep. 525 (K.B. 1696) ("Holt said, upon a fieri facias the sheriff may take anything but wearing clothes; nay, if the party hath two gowns, he may take one of them.").
29. Holmes, supra note 1, at 462.
30. 2 Holmes-Pollock Letters, supra note 4, at 201-02 (letter of July 11, 1927). The editor of the letters dropped a footnote at page 202, saying, "[p]robably Bromage v. Genning, 1 Roll. Rep. 368, described by Holmes in his speech 'The Path of the Law,' 10 Harv. L. Rev. 457, 462 (1897); C.L.P. p.167, at p.175."
31. 2 Holmes-Pollock Letters, supra note 4, at 200 (May 30, 1927). Pollock replied to this by stating: If the promise in a contract were held to be in the alternative - perform or pay damages - then (1) there could be no decrees for specific performance: (2) there would be no reason for allowing any implied exception of frustration or the like: (3) (and chiefly) it would not answer reasonable expectation of promisees. Those are my reasons: I don't see where the moral phraseology comes in. No doubt it might be the law in some other planet. Id. at 201 (June 13, 1927). In the published Holmes-Pollock letters, Holmes never reacted to these and others of Pollock's specific criticisms of Holmes' theory.
32. Id. at 200. He had earlier expressed the same thought on the bench. In Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S. 540 (1903), he remarked that "a man never can be absolutely certain of performing any contract when the time of performance arrives, and in many cases he obviously is taking the risk of an event which is wholly or to an appreciable extent beyond his control." Id. at 543.
33. See supra text accompanying note 1.
34. Holmes, supra note 1, at 463.
35. Id. at 464.
36. Id.
37. See id. at 457-58 (stating that the object of the study of law is "the prediction of the incidence of the public force through the instrumentality of the courts"). "The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by law." Id. at 461.
38. 2 Holmes-Pollock Letters, supra note 4, at 252 (letter of Aug. 30, 1929) (emphasis in original).
39. For a survey of constitutional theorists on the question of rights skepticism, see John C.P. Goldberg & Benjamin Zipursky, The Moral of MacPherson, 146 U. Pa. L. Rev. 1733, 1777-98 (1998).
40. See id. at 1812-47.
41. See, e.g., Lillian R. BeVier, Reconsidering Inducement, 76 Va. L. Rev. 877, 880 (1990) (stating that holding inducers liable suppresses behavior that is likely to be socially unproductive); Donald C. Dowling, Jr., A Contract Theory for a Complex Tort: Limiting Interference with Contract Beyond the Unlawful Means Test, 40 U. Miami L. Rev. 487 (1986) (discussing a third party's liability when interfering with a contractual relationship); Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 133 (1999) (noting the coexistence of efficient breach and the interference tort); Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. Chi. L. Rev. 61, 62 (1982) (arguing for an unlawful means test that restricts tort liability to those cases in which the defendant's act is independently wrongful); Remington, supra note 2, at 649 (arguing that a court "should determine the improperness of mere interference by looking to the nature of the breach that is caused by the interference"); James B. Sales, The Tort of Interference with Contract: An Argument for Requiring a "Valid Existing Contract" to Restrain the Use of Tort Law in Circumventing Contract Remedies, 22 Texas Tech. L. Rev. 123, 154-55 (1991) (arguing that commercial dealings do not operate effectively when challenged and are circumvented by the unpredictable results of tort remedies); Gary D. Wexler, Note, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 282 (1994) (analyzing the tort of intentional interference with contract).
42. See, e.g., Lillian R. BeVier, Reconsidering Inducement, 76 Va. L. Rev. 877, 880 (1990) (stating that holding inducers liable suppresses behavior that is likely to be socially unproductive); Donald C. Dowling, Jr., A Contract Theory for a Complex Tort: Limiting Interference with Contract Beyond the Unlawful Means Test, 40 U. Miami L. Rev. 487 (1986) (discussing a third party's liability when interfering with a contractual relationship); Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 133 (1999) (noting the coexistence of efficient breach and the interference tort); Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. Chi. L. Rev. 61, 62 (1982) (arguing for an unlawful means test that restricts tort liability to those cases in which the defendant's act is independently wrongful); Remington, supra note 2, at 649 (arguing that a court "should determine the improperness of mere interference by looking to the nature of the breach that is caused by the interference"); James B. Sales, The Tort of Interference with Contract: An Argument for Requiring a "Valid Existing Contract" to Restrain the Use of Tort Law in Circumventing Contract Remedies, 22 Texas Tech. L. Rev. 123, 154-55 (1991) (arguing that commercial dealings do not operate effectively when challenged and are circumvented by the unpredictable results of tort remedies); Gary D. Wexler, Note, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 282 (1994) (analyzing the tort of intentional interference with contract).
43. See, e.g., Lillian R. BeVier, Reconsidering Inducement, 76 Va. L. Rev. 877, 880 (1990) (stating that holding inducers liable suppresses behavior that is likely to be socially unproductive); Donald C. Dowling, Jr., A Contract Theory for a Complex Tort: Limiting Interference with Contract Beyond the Unlawful Means Test, 40 U. Miami L. Rev. 487 (1986) (discussing a third party's liability when interfering with a contractual relationship); Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 133 (1999) (noting the coexistence of efficient breach and the interference tort); Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. Chi. L. Rev. 61, 62 (1982) (arguing for an unlawful means test that restricts tort liability to those cases in which the defendant's act is independently wrongful); Remington, supra note 2, at 649 (arguing that a court "should determine the improperness of mere interference by looking to the nature of the breach that is caused by the interference"); James B. Sales, The Tort of Interference with Contract: An Argument for Requiring a "Valid Existing Contract" to Restrain the Use of Tort Law in Circumventing Contract Remedies, 22 Texas Tech. L. Rev. 123, 154-55 (1991) (arguing that commercial dealings do not operate effectively when challenged and are circumvented by the unpredictable results of tort remedies); Gary D. Wexler, Note, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 282 (1994) (analyzing the tort of intentional interference with contract).
44. See, e.g., Lillian R. BeVier, Reconsidering Inducement, 76 Va. L. Rev. 877, 880 (1990) (stating that holding inducers liable suppresses behavior that is likely to be socially unproductive); Donald C. Dowling, Jr., A Contract Theory for a Complex Tort: Limiting Interference with Contract Beyond the Unlawful Means Test, 40 U. Miami L. Rev. 487 (1986) (discussing a third party's liability when interfering with a contractual relationship); Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 133 (1999) (noting the coexistence of efficient breach and the interference tort); Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. Chi. L. Rev. 61, 62 (1982) (arguing for an unlawful means test that restricts tort liability to those cases in which the defendant's act is independently wrongful); Remington, supra note 2, at 649 (arguing that a court "should determine the improperness of mere interference by looking to the nature of the breach that is caused by the interference"); James B. Sales, The Tort of Interference with Contract: An Argument for Requiring a "Valid Existing Contract" to Restrain the Use of Tort Law in Circumventing Contract Remedies, 22 Texas Tech. L. Rev. 123, 154-55 (1991) (arguing that commercial dealings do not operate effectively when challenged and are circumvented by the unpredictable results of tort remedies); Gary D. Wexler, Note, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 282 (1994) (analyzing the tort of intentional interference with contract).
45. See, e.g., Lillian R. BeVier, Reconsidering Inducement, 76 Va. L. Rev. 877, 880 (1990) (stating that holding inducers liable suppresses behavior that is likely to be socially unproductive); Donald C. Dowling, Jr., A Contract Theory for a Complex Tort: Limiting Interference with Contract Beyond the Unlawful Means Test, 40 U. Miami L. Rev. 487 (1986) (discussing a third party's liability when interfering with a contractual relationship); Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 133 (1999) (noting the coexistence of efficient breach and the interference tort); Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. Chi. L. Rev. 61, 62 (1982) (arguing for an unlawful means test that restricts tort liability to those cases in which the defendant's act is independently wrongful); Remington, supra note 2, at 649 (arguing that a court "should determine the improperness of mere interference by looking to the nature of the breach that is caused by the interference"); James B. Sales, The Tort of Interference with Contract: An Argument for Requiring a "Valid Existing Contract" to Restrain the Use of Tort Law in Circumventing Contract Remedies, 22 Texas Tech. L. Rev. 123, 154-55 (1991) (arguing that commercial dealings do not operate effectively when challenged and are circumvented by the unpredictable results of tort remedies); Gary D. Wexler, Note, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 282 (1994) (analyzing the tort of intentional interference with contract).
46. See, e.g., Lillian R. BeVier, Reconsidering Inducement, 76 Va. L. Rev. 877, 880 (1990) (stating that holding inducers liable suppresses behavior that is likely to be socially unproductive); Donald C. Dowling, Jr., A Contract Theory for a Complex Tort: Limiting Interference with Contract Beyond the Unlawful Means Test, 40 U. Miami L. Rev. 487 (1986) (discussing a third party's liability when interfering with a contractual relationship); Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 133 (1999) (noting the coexistence of efficient breach and the interference tort); Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. Chi. L. Rev. 61, 62 (1982) (arguing for an unlawful means test that restricts tort liability to those cases in which the defendant's act is independently wrongful); Remington, supra note 2, at 649 (arguing that a court "should determine the improperness of mere interference by looking to the nature of the breach that is caused by the interference"); James B. Sales, The Tort of Interference with Contract: An Argument for Requiring a "Valid Existing Contract" to Restrain the Use of Tort Law in Circumventing Contract Remedies, 22 Texas Tech. L. Rev. 123, 154-55 (1991) (arguing that commercial dealings do not operate effectively when challenged and are circumvented by the unpredictable results of tort remedies); Gary D. Wexler, Note, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 282 (1994) (analyzing the tort of intentional interference with contract).
47. See Mark P. Gergen, Tortious Interference: How It Is Engulfing Commercial Law, Why This Is Not Entirely Bad, and a Prudential Response, 38 Ariz. L. Rev. 1175, 1178-79 (1996).
48. See, e.g., Ocean Spray Cranberries, Inc. v. Pepsico, Inc., 160 F.3d 58, 61 (1st Cir. 1998) (denying a preliminary injunction and citing Holmes and modern efficient breach theorists); L.L. Cole & Son, Inc. v. Hickman, 665 S.W.2d 278, 281 (Ark. 1984) (refusing to allow punitive damages for contractual breach); Freeman & Mill, Inc. v. Belcher Oil Co., 44 Cal. Rptr. 2d 420, 433 (Cal. 1995) (stating that a person's intentional breach of contract is not a tort); E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436, 445 (Del. 1996) (stating that "punitive damages are not recoverable for breach of contract unless the conduct also amounts independently to a tort"); Francis v. Lee Enters. Inc., 971 P.2d 707, 715 (Haw. 1999) (stating that punitive damages are not recoverable for breach of contract - restoring a well-established common law rule); Frankenmuth Mut. Ins. Co. v. Keeley, 447 N.W.2d 691, 705 n.20 (Mich. 1989) (Levin, J., dissenting) (stating that the duty to keep a contract at common law means that one must pay damages if one does not keep the contract -"and nothing else"); Cafeteria Operators, L.P. v. Coronado-Santa Fe Assocs., 952 P.2d 435, 450 (N.M. Ct. App. 1997) (Harty, C.J., dissenting) (opposing the award of punitive damages); Eckles v. State, 760 P.2d 846, 859 (Or. 1988) (stating a breach of contract by the government is not a taking and can be compensated in damages instead of specific performance).
49. A confused student note writer recently asked why the courts have failed to implement efficient breach theory that is so thoroughly grounded in academic theory. See Craig S. Wakol, Note, Resolving the Paradox Between Legal Theory and Legal Fact: The Judicial Rejection of the Theory of Efficient Breach, 20 Cardozo L. Rev. 321, 321 (1998). The following discussion will demonstrate that such grounding is far from thorough.
50. See Richard A. Posner, Economic Analysis of Law 131 (5th ed. 1998).
51. Thomas S. Ulen, The Efficiency of Specific Performance: Toward a Unified Theory of Contract Remedies, 83 Mich. L. Rev. 341, 342 n.3 (1984).
52. Another stream of economic thought, based on the Kaldor-Hicks principle, is unconcerned whether the non-breaching party is compensated. If the net gain to the breacher exceeds the loss to the non-breaching party, the result is efficient because the world is wealthier. See Posner, supra note 38, at 14-17.
53. Posner, supra note 38, at 119. Posner would make an exception for an "opportunistic" breach, though he fails to define it. Dodge, however, has explained that an opportunistic breach is one that "does not increase the size of the economic pie; the breaching party gains simply by capturing a larger share of the pie at the expense of the nonbreaching party." William S. Dodge, The Case for Punitive Damages in Contracts, 48 Duke L.J. 629, 653 (1999). For an example of such a breach, see Rasnick v. Tubbs, 710 N.E.2d 750, 751 (Ohio Ct. App. 1998), discussing a case where a mechanic, who was a party to a contract to transform a vehicle into a race car, had been paid a considerable amount, but demanded $20,000 above the contract price to complete the transformation. For a recent, detailed, and nuanced defense of efficient breach theory, see David W. Barnes, The Anatomy of Contract Damages and Efficient Breach Theory, 6 S. Cal. Interdise. L.J. 397, 407-11 (1998).
54. Posner, supra note 38, at 119. Posner would make an exception for an "opportunistic" breach, though he fails to define it. Dodge, however, has explained that an opportunistic breach is one that "does not increase the size of the economic pie; the breaching party gains simply by capturing a larger share of the pie at the expense of the nonbreaching party." William S. Dodge, The Case for Punitive Damages in Contracts, 48 Duke L.J. 629, 653 (1999). For an example of such a breach, see Rasnick v. Tubbs, 710 N.E.2d 750, 751 (Ohio Ct. App. 1998), discussing a case where a mechanic, who was a party to a contract to transform a vehicle into a race car, had been paid a considerable amount, but demanded $20,000 above the contract price to complete the transformation. For a recent, detailed, and nuanced defense of efficient breach theory, see David W. Barnes, The Anatomy of Contract Damages and Efficient Breach Theory, 6 S. Cal. Interdise. L.J. 397, 407-11 (1998).
55. Patton v. Mid-Continent Sys., 841 F.2d 742, 750 (7th Cir. 1988) (Posner, J.).
56. Among those arguing against reliance on the efficient breach theory are Daniel Friedmann, The Efficient Breach Fallacy, 18 J. Legal Stud. 1, 1-2 (1989); Ian R. Macneil, Efficient Breaches of Contract: Circles in the Sky, 68 Va. L. Rev. 947, 950 (1982); and William J. Woodward, Jr., Contractarians, Community, and the Tort of Interference with Contract, 80 Minn. L. Rev. 1103, 1107-08 (1996). For others, see infra note 100.
57. Among those arguing against reliance on the efficient breach theory are Daniel Friedmann, The Efficient Breach Fallacy, 18 J. Legal Stud. 1, 1-2 (1989); Ian R. Macneil, Efficient Breaches of Contract: Circles in the Sky, 68 Va. L. Rev. 947, 950 (1982); and William J. Woodward, Jr., Contractarians, Community, and the Tort of Interference with Contract, 80 Minn. L. Rev. 1103, 1107-08 (1996). For others, see infra note 100.
58. Among those arguing against reliance on the efficient breach theory are Daniel Friedmann, The Efficient Breach Fallacy, 18 J. Legal Stud. 1, 1-2 (1989); Ian R. Macneil, Efficient Breaches of Contract: Circles in the Sky, 68 Va. L. Rev. 947, 950 (1982); and William J. Woodward, Jr., Contractarians, Community, and the Tort of Interference with Contract, 80 Minn. L. Rev. 1103, 1107-08 (1996). For others, see infra note 100.
59. Patton, 841 F.2d at 750.
60. See 5 Arthur L. Corbin, Corbin on Contracts § 998, at 23 (2d ed. 1964) ("[T]he chief purposes for which the remedy in damages for breach of contract is given are the prevention of similar breaches in the future and the avoidance of private war."); see also John D. Calamari & Joseph M. Perillo, The Law of Contracts § 1.4 (4th ed. 1998) ("Before courts, there was the feud - private vengeance.... In modern law, where contract law refuses to enter, vengeance and self-help fill the vacuum."). For a concrete illustration, see infra note 96.
61. See Posner, supra note 38, at 23 (stating that economic analysis cannot define policy goals, but may still help determine efficient means of attaining these goals).
62. From the perspective of the breaching party, "it is an open secret that a contract breaker rarely stands to lose as much by his breach as he would by performance. And the more deliberate the breach, the more apt he is to gain." Addison Mueller, Contract Remedies: Business Fact and Legal Fantasy, 1967 Wis. L. Rev. 833, 835.
63. Karl N. Llewellyn, What Price Contract? - An Exercise in Perspective, 40 Yale L.J. 704, 724 (1931). Epstein expresses a similar thought: When parties have explicit contractual terms, they may explicitly negate the implicit option to breach on payment of expectation damages: if so, it is hard to see how a practice that is forbidden by contract could be regarded as efficient. But even when the terms are not explicit, the background norm appears to be relentless. When breaches of this sort take place within the organized trades, the opportunist is drummed out of the business as unreliable for any future dealings. Epstein, supra note 4, at 581 (footnote omitted).
64. U.C.C. § 2-609 cmt. 1 (1999); see also Karl L. Llewellyn, A Realistic Jurisprudence - The Next Step, 30 Colum. L. Rev. 431, 437 (1930) ("It is a heresy when Coke or Holmes speaks of a man having liberty under the law to perform his contract, or pay damages, at his option.").
65. See Calamari & Perillo, supra note 45, § 14.35; E. Allan Farnsworth, Contracts § 12.8 n.5 (3d ed. 1999); John Edward Murray, Jr., Murray on Contracts § 125(F) (3d ed. 1990).
66. See Calamari & Perillo, supra note 45, § 14.5; Farnsworth, supra note 50, § 12.14; Murray, supra note 50, § 120.
67. See Calamari & Perillo, supra note 45, § 14.8; Farnsworth, supra note 50, § 12.15; Murray, supra note 50, § 121.
68. See Calamari & Perillo, supra note 45, § 14.5(b); Farnsworth, supra note 50, § 12.17; Murray, supra note 50, § 123.
69. See Calamari & Perillo, supra note 45, §§ 14.15-14.17; Farnsworth, supra note 50, § 12.12; Murray, supra note 50, § 122.
70. See Dan B. Dobbs, Dobbs Law of Remedies § 3.6(1), at 334 (2d ed. 1993).
71. See, e.g., David D. Siegel, New York Practice §§ 413-416 (3d ed. 1999) (explaining the breakdown of the award of court costs and disbursements).
72. 156 Eng. Rep. 145 (Ex. 1854).
73. Robinson v. Harman, 1 Exch. 850, 855 (1848).
74. In the words of Benjamin Franklin: For want of a nail the shoe was lost; For want of a shoe the horse was lost; And for want of a horse the rider was lost; For the want of a rider the battle was lost; For the want of the battle the kingdom was lost; And all for the want of a horseshoe-nail. Benjamin Franklin, Poor Richard's Almanacks Preface: Note to Courteous Readers (1758). The poem, in some form, is attributed to George Herbert (1651), quoted in John Bartlett, Familiar Quotations 270 (15th ed. 1980).
75. See supra notes 24-25 and accompanying text.
76. See Posner, supra note 38, at 126-28.
77. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) (originating the penalty-default theory); Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (creating a formal model to discover the Hadley Rule's effectiveness); William Bishop, The Contract-Tort Boundary and the Economics of Insurance, 12 J. Legal Stud. 241 (1983) (arguing that the Hadley rule provides an incentive for disclosure); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 Yale L.J. 1261 (1980) (stating that the Hadley rule increases efficiency by stimulating disclosure); 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, 77 Colum. L. Rev. 554 (1977) (discussing why pre-contract disclosure results in more efficient allocation of risks); Alan Schwartz, The Default Rule Paradigm and the Limits of Contract Law, 3 S. Cal. Interdisc. L.J. 389 (1994) (expressing skepticism of the efficiency of penalty- default rules). Barry Adler proposes an "enriched Hadley model" in the penalty- default tradition that takes into account the unpredictable ('stochastic') nature of consequential damages when viewed at the time of contracting, and expresses skepticism whether judges or legislators can craft a rule to take this unpredictability into account. See Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 Stan. L. Rev. 1547 (1999).
78. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) (originating the penalty-default theory); Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (creating a formal model to discover the Hadley Rule's effectiveness); William Bishop, The Contract-Tort Boundary and the Economics of Insurance, 12 J. Legal Stud. 241 (1983) (arguing that the Hadley rule provides an incentive for disclosure); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 Yale L.J. 1261 (1980) (stating that the Hadley rule increases efficiency by stimulating disclosure); 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, 77 Colum. L. Rev. 554 (1977) (discussing why pre-contract disclosure results in more efficient allocation of risks); Alan Schwartz, The Default Rule Paradigm and the Limits of Contract Law, 3 S. Cal. Interdisc. L.J. 389 (1994) (expressing skepticism of the efficiency of penalty- default rules). Barry Adler proposes an "enriched Hadley model" in the penalty- default tradition that takes into account the unpredictable ('stochastic') nature of consequential damages when viewed at the time of contracting, and expresses skepticism whether judges or legislators can craft a rule to take this unpredictability into account. See Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 Stan. L. Rev. 1547 (1999).
79. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) (originating the penalty-default theory); Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (creating a formal model to discover the Hadley Rule's effectiveness); William Bishop, The Contract-Tort Boundary and the Economics of Insurance, 12 J. Legal Stud. 241 (1983) (arguing that the Hadley rule provides an incentive for disclosure); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 Yale L.J. 1261 (1980) (stating that the Hadley rule increases efficiency by stimulating disclosure); 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, 77 Colum. L. Rev. 554 (1977) (discussing why pre-contract disclosure results in more efficient allocation of risks); Alan Schwartz, The Default Rule Paradigm and the Limits of Contract Law, 3 S. Cal. Interdisc. L.J. 389 (1994) (expressing skepticism of the efficiency of penalty- default rules). Barry Adler proposes an "enriched Hadley model" in the penalty- default tradition that takes into account the unpredictable ('stochastic') nature of consequential damages when viewed at the time of contracting, and expresses skepticism whether judges or legislators can craft a rule to take this unpredictability into account. See Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 Stan. L. Rev. 1547 (1999).
80. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) (originating the penalty-default theory); Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (creating a formal model to discover the Hadley Rule's effectiveness); William Bishop, The Contract-Tort Boundary and the Economics of Insurance, 12 J. Legal Stud. 241 (1983) (arguing that the Hadley rule provides an incentive for disclosure); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 Yale L.J. 1261 (1980) (stating that the Hadley rule increases efficiency by stimulating disclosure); 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, 77 Colum. L. Rev. 554 (1977) (discussing why pre-contract disclosure results in more efficient allocation of risks); Alan Schwartz, The Default Rule Paradigm and the Limits of Contract Law, 3 S. Cal. Interdisc. L.J. 389 (1994) (expressing skepticism of the efficiency of penalty- default rules). Barry Adler proposes an "enriched Hadley model" in the penalty- default tradition that takes into account the unpredictable ('stochastic') nature of consequential damages when viewed at the time of contracting, and expresses skepticism whether judges or legislators can craft a rule to take this unpredictability into account. See Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 Stan. L. Rev. 1547 (1999).
81. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) (originating the penalty-default theory); Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (creating a formal model to discover the Hadley Rule's effectiveness); William Bishop, The Contract-Tort Boundary and the Economics of Insurance, 12 J. Legal Stud. 241 (1983) (arguing that the Hadley rule provides an incentive for disclosure); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 Yale L.J. 1261 (1980) (stating that the Hadley rule increases efficiency by stimulating disclosure); 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, 77 Colum. L. Rev. 554 (1977) (discussing why pre-contract disclosure results in more efficient allocation of risks); Alan Schwartz, The Default Rule Paradigm and the Limits of Contract Law, 3 S. Cal. Interdisc. L.J. 389 (1994) (expressing skepticism of the efficiency of penalty- default rules). Barry Adler proposes an "enriched Hadley model" in the penalty- default tradition that takes into account the unpredictable ('stochastic') nature of consequential damages when viewed at the time of contracting, and expresses skepticism whether judges or legislators can craft a rule to take this unpredictability into account. See Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 Stan. L. Rev. 1547 (1999).
82. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) (originating the penalty-default theory); Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (creating a formal model to discover the Hadley Rule's effectiveness); William Bishop, The Contract-Tort Boundary and the Economics of Insurance, 12 J. Legal Stud. 241 (1983) (arguing that the Hadley rule provides an incentive for disclosure); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 Yale L.J. 1261 (1980) (stating that the Hadley rule increases efficiency by stimulating disclosure); 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, 77 Colum. L. Rev. 554 (1977) (discussing why pre-contract disclosure results in more efficient allocation of risks); Alan Schwartz, The Default Rule Paradigm and the Limits of Contract Law, 3 S. Cal. Interdisc. L.J. 389 (1994) (expressing skepticism of the efficiency of penalty-default rules). Barry Adler proposes an "enriched Hadley model" in the penalty-default tradition that takes into account the unpredictable ('stochastic') nature of consequential damages when viewed at the time of contracting, and expresses skepticism whether judges or legislators can craft a rule to take this unpredictability into account. See Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 Stan. L. Rev. 1547 (1999).
83. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) (originating the penalty-default theory); Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (creating a formal model to discover the Hadley Rule's effectiveness); William Bishop, The Contract-Tort Boundary and the Economics of Insurance, 12 J. Legal Stud. 241 (1983) (arguing that the Hadley rule provides an incentive for disclosure); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 Yale L.J. 1261 (1980) (stating that the Hadley rule increases efficiency by stimulating disclosure); 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, 77 Colum. L. Rev. 554 (1977) (discussing why pre-contract disclosure results in more efficient allocation of risks); Alan Schwartz, The Default Rule Paradigm and the Limits of Contract Law, 3 S. Cal. Interdisc. L.J. 389 (1994) (expressing skepticism of the efficiency of penalty- default rules). Barry Adler proposes an "enriched Hadley model" in the penalty- default tradition that takes into account the unpredictable ('stochastic') nature of consequential damages when viewed at the time of contracting, and expresses skepticism whether judges or legislators can craft a rule to take this unpredictability into account. See Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 Stan. L. Rev. 1547 (1999).
84. Richard Danzig, Hadley v. Baxendale: A Study in the Industrialization of the Law, 4 J. Legal Stud. 249, 267 (1975).
85. See Murray, supra note 50, § 120 (3d ed. 1990).
86. Farnsworth, supra note 50, § 12.14, at 821.
87. See Woodward, supra note 43, at 1104.
88. I Robert Joseph Pothier, A Treatise on the Law of Obligations, or Contracts 160 (William David Evans Trans., 1826 ed.). The development of the foreseeability test is discussed by Reinhard Zimmerman, The Law of Obligations: Roman Foundations of the Civilian Tradition 829-33 (1990). The argument of the defendant, Baxendale, included references to the French Civil Code and the American treatise on damages by Theodore Sedgwick, which partially had adopted Pothier's thinking. Nonetheless, its importation into the common law has been skeptically examined. See Guenter Treitel, Remedies for Breach of Contract, in VII International Encyclopedia of Common Law ¶ 83 (1976); see also G.H. Treitel, Remedies for Breach of Contract ¶ 128 (1988) (discussing the ambiguity in tracing the origins of the Hadley foreseeability test).
89. See Charles T. McCormick, Handbook on the Law of Damages § 28 (1935).
90. See Hadley v. Baxendale, 150 Eng. Rep. 145, 149 (1854).
91. In an admiralty case for wrongful capture and detention of a ship, Justice Story had written, and Baxendale's counsel had quoted: Independent however of all authority, I am satisfied upon principle, that an allowance of damages upon the basis of a calculation of profits is inadmissible. The rule would be in the highest degree unfavorable to the interests of the community. The subject would be involved in utter uncertainty. The calculation would proceed upon contingencies, and would require a knowledge of foreign markets, to an exactness in point of time and value, which would sometimes present embarrassing obstacles. Much would depend upon the length of the voyage, and the season of arrival, much upon the vigilance and activity of the master, and much upon the momentary demand. After all, it would be a calculation upon conjecture, and not upon facts. Such a rule, therefore, has been rejected by courts of law in ordinary cases, and instead of deciding upon the gains or losses of parties in particular cases, an uniform interest has been applied, as the measure of damages for the detention of property. The Lively, 15 F. Cas. 631, 634-35 (No. 8,403) (C.C.D. Mass. 1812).
92. See Calamari & Perillo, supra note 45, at 554 (stating that the difference in treatment between antitrust actions in which new businesses establish lost profits and contract actions in which such profits are denied "reveals rather clearly that the standard of certainty, like the rule of foreseeability, is based at least partly upon a policy of limiting contractual risks"); see also L.L. Fuller & William R. Perdue, Jr., The Reliance Interest in Contract Damages: 2, 46 Yale L.J. 373, 373-77 (1937) (discussing situations in which the applicability of the "certainty" requirement affects the damage award); McCormick, supra note 68, at 105 ("Like the 'contemplation of the parties' doctrine, the standard of 'certainty' was developed, and has been used, chiefly as a convenient means for keeping within the bounds of reasonable expectation the risk which litigation imposes upon commercial enterprise." (footnote omitted)).
93. See Fuller & Perdue, supra note 71, at 375 (citing Ralph S. Bauer, The Degree of Moral Fault as Affecting Defendant's Liability, 81 U. Pa. L. Rev. 586, 592 (1933) and 1 Sedgwick, A Treatise on the Measure of Damages §§ 182-200, especially §§ 193-193a (9th ed. 1920)).
94. See 5 Arthur L. Corbin, Corbin on Contracts § 1020, at 126-27 (1964).
95. See Restatement (Second) of Contracts § 352 cmt. a (1981).
96. See Quigley v. Acker, 955 P.2d 1377, 1384-87 (Mont. 1998).
97. See Restatement (Second) of Contracts § 374 cmt. b. But see Freedman v. Rector, Wardens & Vestrymen of St. Mathias Parish, 230 P.2d 629, 632 (Cal. 1951) (Traynor, J.) (rejecting the argument that restitution should be denied to a party who has committed willful breach).
98. See Austin Instrument, Inc. v. Loral Corp., 272 N.E.2d 533, 535 (N.Y. 1971); see also Roth Steel Prods, v. Sharon Steel Corp., 705 F.2d 134, 147-48 (6th Cir. 1983) (stating that coercive threat to breach when seeking contract modification constitutes dishonesty and is evidence of bad faith under U.C.C. § 2-209); Calamari & Perillo, supra note 45, at 317-18 & n.11 (collecting cases where "a threat to breach a contract [has been held to] constitute[] duress if the threatened breach would, if carried out, result in irreparable injury").
99. See Diebold Computer Leasing, Inc. v. Commercial Credit Corp., 267 A.2d 586, 590-92 (Del. 1970); City of New York v. New York Jets Football Club, 394 N.Y.S.2d 799, 803-06 (Sup. Ct. 1977) (enjoining a football club's breach of a lease even though the breach would not result in immediate economic harm to the city).
100. See, e.g., 148 Investment Group, Inc. v. Elvis Presley Enters., Inc., No. 93-6444, 1995 WL 283785, at *1, *2 n.3 (6th Cir. May 10, 1995) (affirming the lower court's grant of damages in the amount equal to the total profits derived from the breach of contract).
101. See McCormick, supra note 68, § 33 (discussing the two rationales for the avoidable consequences doctrine and arguing that the policy rationale is the better theory). Another rationale is that the victim has a conflict of interest because, but for the mitigation principle, the victim would have an incentive to run up damages. See Epstein, supra note 4, § 17.7.
102. See Rice v. Community Health Ass'n, 40 F. Supp. 2d 788, 798 (S.D. W. Va.
103. See Ian R. Macneil, Efficient Breach of Contract: Circles in the Sky, 68 Va. L. Rev. 947, 951-53 (1982). Peter Linzer had made basically the same analysis. See Peter Linzer, On the Amorality of Contract Remedies - Efficiency, Equity, and the Second Restatement, 81 Colum. L. Rev. 111, 138-39 (1981). Professor Thomas Ulen also has argued that the efficiency of remedies depends on transaction costs. See Ulen, supra note 39, at 401 ("[E]fficiency considerations urge specific performance as the routine remedy."). The conclusion that goods flow to the party who values them at their highest is known as the Coase theorem. For its expression, see generally Ronald H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1 (1960) (exploring the intricacies of the Coase theorem).
104. See Ian R. Macneil, Efficient Breach of Contract: Circles in the Sky, 68 Va. L. Rev. 947, 951-53 (1982). Peter Linzer had made basically the same analysis. See Peter Linzer, On the Amorality of Contract Remedies - Efficiency, Equity, and the Second Restatement, 81 Colum. L. Rev. 111, 138-39 (1981). Professor Thomas Ulen also has argued that the efficiency of remedies depends on transaction costs. See Ulen, supra note 39, at 401 ("[E]fficiency considerations urge specific performance as the routine remedy."). The conclusion that goods flow to the party who values them at their highest is known as the Coase theorem. For its expression, see generally Ronald H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1 (1960) (exploring the intricacies of the Coase theorem).
105. See Ian R. Macneil, Efficient Breach of Contract: Circles in the Sky, 68 Va. L. Rev. 947, 951-53 (1982). Peter Linzer had made basically the same analysis. See Peter Linzer, On the Amorality of Contract Remedies - Efficiency, Equity, and the Second Restatement, 81 Colum. L. Rev. 111, 138-39 (1981). Professor Thomas Ulen also has argued that the efficiency of remedies depends on transaction costs. See Ulen, supra note 39, at 401 ("[E]fficiency considerations urge specific performance as the routine remedy."). The conclusion that goods flow to the party who values them at their highest is known as the Coase theorem. For its expression, see generally Ronald H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1 (1960) (exploring the intricacies of the Coase theorem).
106. Daniel A. Farber, Reassessing the Economic Efficiency of Compensatory Damages for Breach of Contract, 66 Va. L. Rev. 1443, 1445 (1980).
107. Robert L. Birmingham, Breach of Contract, Damage Measures, and Economic Efficiency, 24 Rutgers L. Rev. 273, 285 (1970).
108. Daniel Friedmann, The Efficient Breach Fallacy, 18 J. Legal Stud. 1, 7 (1989).
109. Posner, supra note 38, at 133.
110. Dodge, supra note 41, at 675.
111. See Gergen, supra note 35, at 1206-18.
112. See Epstein, supra note 4, §§ 21.2-21.5; Richard A. Epstein, Inducement of Breach of Contract as a Problem of Ostensible Ownership, 16 J. Legal Stud. 1, 2-3, 19-29 (1987) [hereinafter Epstein, Inducement]; see also Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 140-42 (1999) (summarizing Epstein's view of tortious interference).
113. See Epstein, supra note 4, §§ 21.2-21.5; Richard A. Epstein, Inducement of Breach of Contract as a Problem of Ostensible Ownership, 16 J. Legal Stud. 1, 2-3, 19- 29 (1987) [hereinafter Epstein, Inducement]; see also Fred S. McChesney, Tortious Interference with Contract Versus "Efficient" Breach: Theory and Empirical Evidence, 28 J. Legal Stud. 131, 140-42 (1999) (summarizing Epstein's view of tortious interference).
114. See W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 129, at 978 (5th ed. 1984).
115. For a recent expression of this view, see Remington, supra note 2, at 710.
116. See Restatement (Second) of Torts § 876(b) (1979); see, e.g., Shelter Mut. Ins. Co. v. White, 930 S.W.2d 1, 3-5 (Mo. Ct. App. 1996) (holding that passengers who encouraged reckless driving are liable along with the driver to injured third persons).
117. See supra text accompanying notes 68-74.
118. See Restatement (Second) of Contracts § 237 illus. 7, § 241(e) & cmt. f (1981). But see id. at 100, Introductory note to ch. 16 (describing traditional law of contract remedies as not distinguishing between willful breaches and other breaches).
119. There are two competing measures of damages for breach of a construction contract where the breach involves a non-conformity between the structure as built and the specifications. The usual measure is the cost of correcting the defect. At times, the courts measure damages by the difference between the value the structure would have had if it were built to specifications and the value it has with the nonconformity. In the hypothetical, the first measure would produce a substantial judgment while the second measure would result in merely nominal damages. See Calamari & Perillo, supra note 45, § 14.29.
120. See Jacob & Youngs, Inc. v. Kent, 129 N.B. 889, 891 (N.Y. 1921). Three of the seven judges dissented. Certainly Cardozo, writing for the majority, would have joined them if the breach had been willful. Cardozo wrote, "[t]he willful transgressor must accept the penalty of his transgression. For him there is no occasion to mitigate the rigor of implied conditions. The transgressor whose default is unintentional and trivial may hope for mercy if he will offer atonement for his wrong." Id. at 891 (citations omitted); see also VRT, Inc. v. Dutton-Lainson Co., 530 N.W.2d 619, 623 (Neb. 1995) (holding that bad faith in performance precluded a finding of substantial performance). See generally Patricia H. Marschall, Willfulness: A Crucial Factor in Choosing Remedies for Breach of Contract, 24 Ariz. L. Rev. 733 (1982) (describing the role of willfulness in the law of contract remedies and arguing for increased emphasis on this factor).
121. See Shell v. Schmidt, 330 P.2d 817, 820 (Cal. Ct. App. 1958); Groves v. John Wunder Co., 286 N.W. 235, 236-38 (Minn. 1939); City Sch. Dist. v. McLane Constr. Co., 445 N.Y.S.2d 258, 260 (App. Div. 1981); Marschall, supra note 96, at 734-39. Professor Sebert observes that the cost of repair rule in this situation is a form of punitive damages. See John A. Sebert, Jr., Punitive and Nonpecuniary Damages in Actions Based upon Contract: Toward Achieving the Objective of Full Compensation, 33 UCLA L. Rev. 1565, 1644-47 (1986).
122. See American Standard, Inc. v. Schectman, 439 N.Y.S.2d 529, 531-34 (App. Div. 1981). There are contrary cases. See Calamari & Perillo, supra note 45, § 14.29.
123. Macneil, supra note 82, at 968.
124. See Alan Schwartz, The Case for Specific Performance, 89 Yale L.J. 271, 274-78 (1979); Alan Schwartz, The Myth that Promisees Prefer Supracompensatory Remedies: An Analysis of Contracting for Damage Measures, 100 Yale L.J. 369, 387- 89 (1990). Compare Linzer, supra note 82, at 138 ("The general use of specific performance will produce truer economic efficiency than a system that counts the money cost of performance to the promisor but not the unquantifiable emotional and other costs of nonperformance to the promisee."), and Ulen, supra note 39, at 365-66 ("[S]pecific performance should be, on efficiency grounds, the routine contract remedy."), with Macneil, supra note 82, at 968 (stating that expectation damages can be more efficient than specific performance depending on the situation's specific transaction costs), and Edward Yorio, In Defense of Money Damages for Breach of Contract, 82 Colum. L. Rev. 1365, 1423 (1982) ("[T]he most efficient rule is not specific performance, but a rule that awards the cost of completion in all cases.").
125. See Alan Schwartz, The Case for Specific Performance, 89 Yale L.J. 271, 274- 78 (1979); Alan Schwartz, The Myth that Promisees Prefer Supracompensatory Remedies: An Analysis of Contracting for Damage Measures, 100 Yale L.J. 369, 387-89 (1990). Compare Linzer, supra note 82, at 138 ("The general use of specific performance will produce truer economic efficiency than a system that counts the money cost of performance to the promisor but not the unquantifiable emotional and other costs of nonperformance to the promisee."), and Ulen, supra note 39, at 365-66 ("[S]pecific performance should be, on efficiency grounds, the routine contract remedy."), with Macneil, supra note 82, at 968 (stating that expectation damages can be more efficient than specific performance depending on the situation's specific transaction costs), and Edward Yorio, In Defense of Money Damages for Breach of Contract, 82 Colum. L. Rev. 1365, 1423 (1982) ("[T]he most efficient rule is not specific performance, but a rule that awards the cost of completion in all cases.").
126. See Alan Schwartz, The Case for Specific Performance, 89 Yale L.J. 271, 274- 78 (1979); Alan Schwartz, The Myth that Promisees Prefer Supracompensatory Remedies: An Analysis of Contracting for Damage Measures, 100 Yale L.J. 369, 387- 89 (1990). Compare Linzer, supra note 82, at 138 ("The general use of specific performance will produce truer economic efficiency than a system that counts the money cost of performance to the promisor but not the unquantifiable emotional and other costs of nonperformance to the promisee."), and Ulen, supra note 39, at 365-66 ("[S]pecific performance should be, on efficiency grounds, the routine contract remedy."), with Macneil, supra note 82, at 968 (stating that expectation damages can be more efficient than specific performance depending on the situation's specific transaction costs), and Edward Yorio, In Defense of Money Damages for Breach of Contract, 82 Colum. L. Rev. 1365, 1423 (1982) ("[T]he most efficient rule is not specific performance, but a rule that awards the cost of completion in all cases.").
127. See Posner, supra note 38, at 146; Anthony T. Kronman, Specific Performance, 45 U. Chi. L. Rev. 351, 366-67 (1978); Timothy J. Muris, The Costs of Freely Granting Specific Performance, 1982 Duke L.J. 1053, 1058-68 (discussing economic, moral, and administrative factors that inform a decision to grant or deny equitable relief); Doug Rendleman, The Inadequate Remedy at Law Prerequisite for an Injunction, 33 U. Fla. L. Rev. 346 (1981).
128. See Posner, supra note 38, at 146; Anthony T. Kronman, Specific Performance, 45 U. Chi. L. Rev. 351, 366-67 (1978); Timothy J. Muris, The Costs of Freely Granting Specific Performance, 1982 Duke L.J. 1053, 1058-68 (discussing economic, moral, and administrative factors that inform a decision to grant or deny equitable relief); Doug Rendleman, The Inadequate Remedy at Law Prerequisite for an Injunction, 33 U. Fla. L. Rev. 346 (1981).
129. See Posner, supra note 38, at 146; Anthony T. Kronman, Specific Performance, 45 U. Chi. L. Rev. 351, 366-67 (1978); Timothy J. Muris, The Costs of Freely Granting Specific Performance, 1982 Duke L.J. 1053, 1058-68 (discussing economic, moral, and administrative factors that inform a decision to grant or deny equitable relief); Doug Rendleman, The Inadequate Remedy at Law Prerequisite for an Injunction, 33 U. Fla. L. Rev. 346 (1981).
130. See Farrell Lines, Inc. v. City of New York, 281 N.E.2d 162, 166 (N.Y. 1972).
131. See M. T. Van Hecke, Changing Emphases in Specific Performance, 40 N.C. L. Rev. 1, 1 (1961). The revolution against the subordination of equitable relief from the hegemony of damages has perhaps a bit prematurely declared to have been won. See Douglas Laycock, The Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687, 691-92 (1990); see also Rendleman, supra note 101, at 347-48 (stating that courts analyze several factors before deciding whether specific performance is an appropriate remedy). Yet, the revolution proceeds apace. See United Nations Convention for the International Sale of Goods art. 46; UNIDROIT Principles of International Commercial Contracts art. 7.2.3 International Institute for the Unification of Private Law (1994); U.C.C. 1999 Revision Draft § 2-807 (last modified Jan. 27, 2000) 〈http://www.law.upenn.edu/bll/ulc/ulc.htm#ucc2〉.
132. See M. T. Van Hecke, Changing Emphases in Specific Performance, 40 N.C. L. Rev. 1, 1 (1961). The revolution against the subordination of equitable relief from the hegemony of damages has perhaps a bit prematurely declared to have been won. See Douglas Laycock, The Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687, 691-92 (1990); see also Rendleman, supra note 101, at 347-48 (stating that courts analyze several factors before deciding whether specific performance is an appropriate remedy). Yet, the revolution proceeds apace. See United Nations Convention for the International Sale of Goods art. 46; UNIDROIT Principles of International Commercial Contracts art. 7.2.3 International Institute for the Unification of Private Law (1994); U.C.C. 1999 Revision Draft § 2-807 (last modified Jan. 27, 2000) 〈http://www.law.upenn.edu/bll/ulc/ulc.htm#ucc2〉.
133. Dodge, supra note 41, at 687.
134. The following newspaper excerpt provides an example of the enforcement of an illegal drug agreement: [T]he body of a Colombian named Diego was found on July 14 stuffed into a suitcase beside the Grand Central Parkway. The man, who law-enforcement officials said had been accused of withholding payment of $350,000 to a group of drug traffickers, was found bound and gagged with duct tape. A cord was wound around his neck, a rotting onion was taped into his mouth and his leg had been cut with a knife. Clifford Krauss, In Queens, Deadly Echoes of Colombia's Drug War, N.Y. Times, Nov. 25, 1995, at A1.
135. A naïve borrower approached a loan shark for a loan and inquired what collateral the lender might want. He was informed that '"[y]our body is your collateral.'" N.Y. State Comm'n. of An Investigation of the Loan Shark Racket 11 (1965).
136. See Robert Hillman, The Richness of Contract Law (1997).
137. Birmingham quotes an extreme statement by St. Bernardine: [A]ll the saints and all the angels of paradise cry then against him, saying, 'To hell, to hell, to hell.' Also the heavens with their stars cry out, saying, 'To the fire, to the fire, to the fire.' The planets also clamor, 'To the depths, to the depths, to the depths.' Birmingham, supra note 84, at 275-76 n.10 (quoting St. Bernardine, De Evangelio Aeterno sermon 45, art. 3, cl. 3 in 2 Opera Omnia (de la Haye ed. 1745)). This precious reference, however, is not about contract breachers. Rather, St. Bernardine was condemning usurers. It is likely, however, he would have so condemned promise breakers. See James Gordley, Contracts in General, in 7 International Encyclopedia of Comparative Law ch 2 §§ 24-29 (1997) (detailing Roman, Medieval and Aristotelian traditions of contract doctrine).
138. Modern proponents of a natural law basis for the enforcement of contracts, based on Aristotelian philosophy, include Henry Mather, Contract Law and Morality 67-68 (1999) (arguing that intentional breaches should be dealt with more severely than unintentional breaches). See also John Rawls, A Theory of Justice 342-47 (1971) ("The obligation to keep a promise is a consequence of the principle of fairness."). For an explication of a mixture of religious and Aristotelian foundations for contract law, see John Finnis, Natural Law and Natural Rights 178-83, 284-86 (Clarendon Press 1988). For an historical survey of natural law thinking about contract law, see Larry A. DiMatteo, The History of Natural Law Theory: Transforming Embedded Influences into a Fuller Understanding of Modern Contract Law, 60 U. Pitt. L. Rev. 839 (1999). A moral basis for contract performance is assumed in F.C. Sharp, The Ethics of Breach of Contract, 45 Int'l J. of Ethics 27 (1934), which discusses situations in which nonperformance may be ethical.
139. Modern proponents of a natural law basis for the enforcement of contracts, based on Aristotelian philosophy, include Henry Mather, Contract Law and Morality 67-68 (1999) (arguing that intentional breaches should be dealt with more severely than unintentional breaches). See also John Rawls, A Theory of Justice 342-47 (1971) ("The obligation to keep a promise is a consequence of the principle of fairness."). For an explication of a mixture of religious and Aristotelian foundations for contract law, see John Finnis, Natural Law and Natural Rights 178-83, 284-86 (Clarendon Press 1988). For an historical survey of natural law thinking about contract law, see Larry A. DiMatteo, The History of Natural Law Theory: Transforming Embedded Influences into a Fuller Understanding of Modern Contract Law, 60 U. Pitt. L. Rev. 839 (1999). A moral basis for contract performance is assumed in F.C. Sharp, The Ethics of Breach of Contract, 45 Int'l J. of Ethics 27 (1934), which discusses situations in which nonperformance may be ethical.
140. Modern proponents of a natural law basis for the enforcement of contracts, based on Aristotelian philosophy, include Henry Mather, Contract Law and Morality 67-68 (1999) (arguing that intentional breaches should be dealt with more severely than unintentional breaches). See also John Rawls, A Theory of Justice 342-47 (1971) ("The obligation to keep a promise is a consequence of the principle of fairness."). For an explication of a mixture of religious and Aristotelian foundations for contract law, see John Finnis, Natural Law and Natural Rights 178-83, 284-86 (Clarendon Press 1988). For an historical survey of natural law thinking about contract law, see Larry A. DiMatteo, The History of Natural Law Theory: Transforming Embedded Influences into a Fuller Understanding of Modern Contract Law, 60 U. Pitt. L. Rev. 839 (1999). A moral basis for contract performance is assumed in F.C. Sharp, The Ethics of Breach of Contract, 45 Int'l J. of Ethics 27 (1934), which discusses situations in which nonperformance may be ethical.
141. Modern proponents of a natural law basis for the enforcement of contracts, based on Aristotelian philosophy, include Henry Mather, Contract Law and Morality 67-68 (1999) (arguing that intentional breaches should be dealt with more severely than unintentional breaches). See also John Rawls, A Theory of Justice 342-47 (1971) ("The obligation to keep a promise is a consequence of the principle of fairness."). For an explication of a mixture of religious and Aristotelian foundations for contract law, see John Finnis, Natural Law and Natural Rights 178-83, 284-86 (Clarendon Press 1988). For an historical survey of natural law thinking about contract law, see Larry A. DiMatteo, The History of Natural Law Theory: Transforming Embedded Influences into a Fuller Understanding of Modern Contract Law, 60 U. Pitt. L. Rev. 839 (1999). A moral basis for contract performance is assumed in F.C. Sharp, The Ethics of Breach of Contract, 45 Int'l J. of Ethics 27 (1934), which discusses situations in which nonperformance may be ethical.
142. See Gordley, supra note 108, at §§ 20-39 (discussing nineteenth century will theory).
143. Merle Miller, Plain Speaking: An Oral Biography of Harry S. Truman 48 (1974) (quoting Harry S. Truman).
144. Hillman, supra note 107, at 6. But see Randy E. Barnett, The Richness of Contract Theory, 97 Mich. L. Rev. 1413, 1421 (1999) (book review) (criticizing Hillman's thesis). Cf. 2 Reinhold Niebuhr, The Nature and Destiny of Man 257 (1949) ("Usually the norms of law are compromises between the rational-moral . . . and the possibilities of the situation. . . .").
145. Hillman, supra note 107, at 6. But see Randy E. Barnett, The Richness of Contract Theory, 97 Mich. L. Rev. 1413, 1421 (1999) (book review) (criticizing Hillman's thesis). Cf. 2 Reinhold Niebuhr, The Nature and Destiny of Man 257 (1949) ("Usually the norms of law are compromises between the rational-moral . . . and the possibilities of the situation. . . .").
146. See David Baumer & Patricia Marschall, Willful Breach of Contract for the Sale of Goods: Can the Bane of Business be an Economic Bonanza?, 65 Temp. L. Rev. 159, 163-72 (1992) (analyzing efficient breach theory in the light of a survey of business executives).
147. See, e.g., People v. Navarroli, 521 N.E.2d 891, 895-96 (Ill. 1988) (holding that specific performance of a plea bargain agreement is "unnecessary to redress [defendant's] detrimental reliance"). Interestingly enough, Navarroli is the center piece of E. Allan Farnsworth, Changing Your Mind: The Law of Regretted Decisions (1998).
148. For example, in the case of a merger or acquisition by an asset purchase agreement, it is quite common to list the outstanding significant contracts of the acquired company and a value is placed on such contracts. Consider, too, the relatively free assignability of contract rights. See Calamari & Perillo, supra note 45, § 18.10, at 680 ("The modern view is emphatically to the effect that rights are ordinarily assignable."). Freedom of alienation of property is one of the earmarks of the shift from feudalism to capitalism. Free alienability of contract rights is perhaps the last step in that property reform.
149. It is perhaps anomalous that tort law sometimes protects unenforceable contracts. This anomaly perhaps can be explained by the fact that the victim of the tort may have sunk significant resources in the unenforceable deal. See Epstein, Inducement, supra note 89, at 23-24.
150. See U.S. Const, art. I, § 10, cl. 1.
151. See Calamari & Perillo, supra note 45, § 11.10, at 680.