Why no "efficient breach" in the civil law?: A comparative assessment of the doctrine of efficient breach of contract

American Journal of Comparative Law

Volumn 55, Issue 4, 2007, Pages 721-766

  Scalise Jr , Ronald J ^a,b,c  

^a TULANE UNIVERSITY   (United States)

^b TRINITY COLLEGE   (United Kingdom)

^c LOUISIANA STATE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 36348940372     PISSN: 0002919X     EISSN: None     Source Type: Journal    
DOI: 10.1093/ajcl/55.4.721     Document Type: Review

References (288)

1. THOMAS H. HUXLEY, APHORISMS AND REFLECTIONS CXI (selected by Henrietta A. Huxley, 1907).
2. See, e.g., STEPHEN HAWKING, A BRIEF HISTORY OF TIME: FROM THE BIG BANG TO BLACK HOLES 155-69 (1988).
3. See, e.g., ALBERT BANDURA, SOCIAL FOUNDATIONS OF THOUGHT AND ACTION: A SOCIAL COGNITIVE THEORY (1985).
4. See, e.g., TOWARD A GENERAL THEORY OF ACTION (Talcott Parsons & Edward A. Shils eds., 1951).
5. See, e.g., André Tunc, The Grand Outlines of the Code, in THE CODE NAPOLEON AND THE COMMON- LAW WORLD, 19-45 (Bernard Schwarz ed., 1956);
6. JAMES GORDLEY, THE PHILOSOPHICAL ORIGINS OF MODERN CONTRACT DOCTRINE (1991) (espousing a theory of contract based on Aristotle and Aquinas).
7. Other scholars have expressed a skeptical view of grand explanatory theories of the law. See, e.g., Tony Weir, Contracts in Rome and England, 66 TUL. L. REV. 1615, 1616 (1991) ("It is possible for us, like Hamlet, to tell a hawk from a handsaw, and to do so without a complete theory of aerial predators or an exhaustive inventory of the carpenter's toolbox; furthermore, we can effect such telling without having a theory of telling, though the current fad of epistemology might lead one to doubt that (given a theory of doubting).")
8. Richard Posner, Law and Economics in Common-Law, Civil-Law, and Developing Nations, 17 RATIO JURIS 1, 68 (2004).
9. In fact, the breaching party will be better off and the other party will be no worse off.
10. Oliver Wendell Holmes, Jr., The Path of the Law, 10 HARV. L. REV. 457, 462 (1897).
11. Joseph M. Perillo, Misreading Oliver Wendell Holmes on Efficient Breach and Tortious Interference, 68 FORDHAM L. REV. 1085 (2000).
12. DIG. 2.14.7.7 (Ulpian, Edict 4).
13. For background on development of the idea of "pacta sunt servanda," see REINHARD ZIMMERMANN, THE LAW OF OBLIGATIONS: ROMAN FOUNDATIONS OF THE CIVILIAN TRADITION 542-45 (1990).
14. Many have persuasively argued that because a contract is a promise, breaking a promise or breaching a contract is immoral. See, e.g., IMMANUEL KANT, GROUNDING FOR THE METAPHYSICS OF MORALS 31 (James W. Ellington trans., 1993) (1785);
15. DAVID HUME, TREATISE OF HUMAN NATURE § III.II.V (1739).
16. More recently, other scholars have taken similar views, see, e.g., Thomas Scanlon, Promises and Practices, 19 PHIL & PUB. AFF. 199 (1990);
17. Steven Shavell, Is Breach of Contract Immoral?, 56 EMORY L. J. 439 (2006).
18. The United States, the very home to the theory of efficient breach, similarly recognizes the duty of good faith in the performance of contracts. Section 1-203 of the Uniform Commercial Code provides that "Every contract or duty . . . imposes an obligation of good faith in its performance or enforcement." U.C.C. § 1-203. The Restatement (Second) of Contracts provides similarly. RESTATEMENT (SECOND) OF CONTRACTS § 205 ("[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement"). For background on the concept of "good faith" in American contract law, see Robert S. Summers, The Conceptualization of Good Faith in American Contract Law: A General Account, in GOOD FAITH IN EUROPEAN CONTRACT LAW 118-41 (Reinhard Zimmermann & Simon Whittaker eds., 2000);
19. STEVEN J. BURTON & ERIC G. ANDERSEN, CONTRACTUAL GOOD FAITH - FORMATION, PERFORMANCE, BREACH, AND ENFORCEMENT (1995);
20. Robert S. Summers, "Good Faith" in General Contract Law and the Sales Provisions of the Uniform Commercial Code, 54 VIRG. L. REV. 195 (1968);
21. E. Allan Farnsworth, Good Faith Performance and Commercial Reasonableness Under the Uniform Commercial Code, 30 UNIV. CHI. L. REV. 666 (1963). Unlike the European conception of good faith in contracts, the American idea does not apply to the contract formation stage. See, e.g., RESTATEMENT (SECOND) OF CONTRACTS § 205, cmt. c ("This section, like the Uniform Commercial Code § 1-203, does not deal with good faith in the formation of a contract.").
22. Admittedly, the theory of efficient breach has been subject to serious (and perhaps justifiable) criticism. See, e.g., David Friedman, The Efficient Breach Fallacy, 18 J. LEGAL STUD. 1 (1989);
23. Ian R. Macneil, Efficient Breach of Contract: Circles in the Sky, 68 VA. L. REV. 947 (1982).
24. A Pareto improvement (named after the Italian economist Vilfredo Pareto) is a change in circumstances that renders at least one party better off than he was in a previous situation without rendering the other party worse off. Thus, in an efficient breach, the breaching party is better off, while the nonbreaching party is not worse off because the profit made by the breaching party is so great that he can and does compensate the nonbreaching party for his losses and still retain enough to be in a better position than he would be in had he adhered to the contract. A Kaldor-Hicks improvement is one in which a situation in toto is better than an earlier situation, even if certain individuals are themselves worse off. That is, a Kaldor-Hicks improvement occurs when the breaching party has gained sufficient profit that he could (but does not) pay the nonbreaching party for his damage and still retain enough to be in a better position than he would be in had he not breached. See generally Clark 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, 648 (1999).
25. This is not to concede that damages as the routine remedy for breach of contract are more efficient than a regime of specific performance. See, e.g., Thomas S. Ulen, The Efficiency of Specific Performance: Toward a Unified Theory of Contract Remedies, 83 MICH. L. REV. 341 (1984);
26. Alan Schwarz, The Case for Specific Performance, 89 YALE L.J. 271 (1979).
27. Perillo, supra note 9, at 1102.
28. 24 RICHARD A. LORD, WILLISTON ON CONTRACTS § 64:1 (4th ed. 2006).
29. See also Melvin A. Eisenberg, Actual and Virtual Specific Performance, The Theory of Efficient Breach, and the Indifference Principle in Contract Law, 93 CAL. L. REV. 975, 1016 (2005) (noting that "specific performance is an exceptional remedy, to be granted only if damages would not be adequate" but recognizing exceptions for when the subject matter of the contract is unique, real property is involved, or when continuing court supervision is required); RESTATEMENT (SECOND) CONTRACTS, § 357, 359-60, 366-67 (1981).
30. RUDOLF B. SCHLESINGER ET AL., COMPARATIVE LAW 739 (6th ed. 1998) ("[T]he civilians' recognition of the obligee's right to specific performance (so long as performance is not shown to be actually impossible) stands in marked contrast to the common law's preference for non-specific remedies."). Id. at 740 "(The result is that, contrary to common-law notions, a judgment ordering specific performance, i.e., performance in accordance with the terms of the contract, is the normal, primary remedy for non-performance in most civil-law countries.")
31. See John P. Dawson, Specific Performance in France and Germany, 57 MICH. L. REV. 495, 496 (1958) (stating that developments in Roman law regarding remedies for non-performance of contracts were parallel to developments in English law).
32. Dawson, supra note 20, at 497.
33. TWELVE TABLES, TABLE III.5 ("Meanwhile they shall have the right to compromise, and unless they make a compromise the debtors shall be held in bonds for sixty days. During these days they shall be brought to the praetor into the meeting place on three successive market days, and the amount for which they have been judged liable shall be declared publicly. Moreover, on the third market day they shall suffer capital punishment or shall be delivered for sale abroad across the Tiber River."). See also Dawson, supra note 20, at 497.
34. Gaius, Institutes, IV, 48, in THE INSTITUTES OF GAIUS (trans. and intro. by William M. Gordon & Olivia F. Robinson, 1988). For more on the above text from Gaius, see Dawson, supra note 20, at 496.
35. Dawson, supra note 20, at 499.
36. Id. at 500.
37. Id. at 499-500.
38. See DIG. 6.1.68 (Ulpian, Edict 51); Dawson, supra note 20, at 500-01.
39. Dawson, supra note 20, at 540-05. This is due to the persuasion of the scholar, Maritinus, known as a champion of equity, who won the day, partly in reliance on an altered text from the Digest mentioned above. STUDIES IN THE GLOSSATORS OF THE ROMAN LAW: NEWLY DISCOVERED WRITINGS OF THE TWELFTH CENTURY 87 (Herman Kantorowicz & William Warwick Buckland eds., 1969).
40. Dawson, supra note 20, at 540-05.
41. RICHARD H. HELMHOLZ, THE SPIRIT OF CLASSICAL CANON LAW 161 (1996).
42. Dawson, supra note 20, at 509. Pothier states that "[w]hen a person is obliged to do any act, this obligation does not give the creditor a right of compelling the debtor specifically to perform the act which he is obliged to do, but only a right to have him condemned in damages for not performing his obligation." 1 ROBERT POTHIER, TRAITÉ DES OBLIGATIONS § 157, IN OEUVRES DE POTHIER (Banchs ed., New ed. 1974). The same, Pothier states, applies for obligations not to do. Id. § 158.
43. C. CIV. art. 1184, line 2. Of course, prior to the question of remedy is a question of whether there was a culpable breach. That determination hinges upon classification of inexecution of the contract as arising from fault rather than force majeure and further upon the question as to whether the obligation was one of result (de résultat) or to do one's best (de moyens). The following discussion assumes an obligation de résultat or an obligation de moyens in which one's best was not done and that the inexecution was due to fault rather than force majeure.
44. JOHN BELL ET AL., PRINCIPLES OF FRENCH LAW 346 (1998).
45. 2 BORIS STARK ET AL., OBLIGATIONS: CONTRAT 581 (5th ed. 1995).
46. SIR BASIL MARKESINIS ET AL., THE GERMAN LAW OF CONTRACT: A COMPARATIVE TREATISE 399 (2d ed. 2006).
47. BÜRGERLICHES GESETZBUCH [BGB] [Civil Code] § 241(I), excerpted and translated in MARKESINIS, supra note 35, App. II [hereinafter BGB].
48. 2 KONRAD ZWEIGERT & HEIN KÖTZ, AN INTRODUCTION TO COMPARATIVE LAW 159 (Tony Weir trans., 2d ed. 1987).
49. German Code of Civil Procedure § 264, in GERMAN COMMERCIAL CODE & CODE OF CIVIL PROCEDURE 258 (Charles E. Stewart trans., 2001) ("The following shall not be deemed to be an amendment of the complaint in the event that, without altering the cause of action: . . . another object or interest is claimed instead of the object originally demanded as a result of a subsequent change."). See also id. § 268 ("There shall be no appeal against a decision to the effect that there is no amendment to the complaint or that such amendment was permissible.").
50. See, e.g., id. § 883 (providing that movable property "shall be taken away from him or her by the marshal and handed over to the creditor"); Id. § 885 (providing that for immovable property "the marshal shall dispossess the debtor and put the creditor into possession"); Id. § 887 (providing that if the object of the contracted-for performance is not delivery of a thing but performance of an act, the court may order a third person to perform it for the creditor at the debtor's expense); Id. § 888 (providing that if the object of the contract is an act that depends exclusively on the will of the debtor, the debtor can be "compelled to undertake the act by fines, and in the case where such cannot be exacted, by coercive detention . . . . ").
51. But see Dawson, supra note 20, at 525 ("The contrast between the French and the German treatment of specific performance is one among many demonstrations of the great differences between the 'civil law' systems.").
52. Pheobeus Chr. Chistodoulou, Law of Obligations, in INTRODUCTION TO GREEK LAW 81 (Konstantinos D. Kerameus & Phaedon J. Kozyris eds., 2d ed. 1993) ("The primary legal remedy for non-performance is a claim to performance in kind."); CODIGO CIVIL (Spanish Civil Code) art. 1096 ("[W]hen what should be delivered is a determinate thing, the creditor . . . can compel the debtor to perform the delivery . . . . "); CODICE CIVILE (Italian Civil Code) art. 1453 ("In contracts providing for mutual counterperformance, when one of the parties fails to perform his obligation, the other can choose to demand either performance or dissolution of the contract, saving, in any case, compensation for damages."); COSTA RICA CIVIL CODE art. 693; PERU CIVIL CODE art. 1150.
53. Moreover, specific performance in a common law jurisdiction is not as "uncommon" as one might be led to believe. See, e.g., U.C.C. § 2-716:1 (stating that a buyer may elect specific performance in the following circumstances: (1) goods are unique, (2) proper circumstances are shown, and (3) the buyer is unable to obtain replacement for the goods contracted for. See also Co-operative Ins. Soc. Ltd. v. Argyll Stores, [1998] A.C. 1 (H.L.) (Hoffman, L.) ("[B]y the nineteenth century it was orthodox doctrine that the power to decree specific performance was part of the discretionary jurisdiction of the Court of Chancery to do justice in cases in which the remedies available at common law were inadequate . . . . The principles upon which English judges exercise the discretion to grant specific performance are reasonably well settled and depend upon a number of considerations, mostly of a practical nature . . . . I would expect that judges [in civil law jurisdictions] take much the same matters into account in deciding whether specific performance would be inappropriate in a particular case.").
54. BELL ET AL., supra note 33, at 348.
55. 2 STARK ET AL., supra note 34, at 583 (stating that for obligations to transfer property, the transfer is realized " automatically" upon agreement of the parties).
56. See C. CIV. art. 1136. See also BELL ET AL., supra note 33, at 348. Even in this case, where the obligation to give is self-executing, the obligation to deliver the money still remains. BARRY NICHOLAS, THE FRENCH LAW OF CONTRACT 211 (1992). The two obligations, however, are so interconnected that courts will order delivery "through its officer, the hussier." Id. On the other hand, for contracts to deliver unspecified things, courts have characterized the remaining duty to deliver as an obligation de faire. BELL ET AL., supra note 33, at 348. See C. CIV. art. 1138 ("The obligation of delivering a thing is perfected by the consent alone of the contracting parties. It makes the creditor the owner and places the thing at his risk from the moment when it should have been delivered, although the transfer has not been made . . . . "); NICHOLAS, supra, at 211. Moreover, in the context of a contract of sale, art. 1610 of the Civil Code provides that "[i]f the seller fails to make delivery within the time agreed between the parties, the buyer may, at his choice, demand rescission of the sale or his being put in possession, if the delay resulted only from an act of the seller." C. CIV. art. 1610.
57. This was also the view of Pothier, see ROBERT JOSEPH POTHIER, TREATISE ON THE CONTRACT OF SALE, § 68 (L.S. Cushing trans., 1839) ("I think, that, in case of a refusal by the seller to deliver the thing sold, which he has in his possession, the judge may permit the buyer to seize and carry it away, if it is a movable, or to put himself in possession of it, if it consists of a piece of land or a building, and to expel the seller, if he refuses to quit, by the ministry of an officer."). Even in instances in which transfer of ownership depends upon execution of some other document, specific performance is still available insofar as the judgment of the court can substitute for the instrument.
58. C. CIV. art. 1142.
59. Cass. 1e civ., Jan. 1, 1953, Bull. civ. I, No. 26; NICHOLAS, supra note 45, at 213. For the origin of the distinction between obligations to give and obligations to do, see Dawson, supra note 20, at 501-06 (suggesting mistaken reliance on a text of Ulpian in which the distinction is suggested in a different context); DIG. 45.1.72 (Ulpain, Edict 20).
60. See, e.g., Cass, civ., Mar. 14, 1900, D.P.I. 1900, 497; 2 ZWEIGERT & KÖTZ, supra note 37, at 164-65. POTHIER, supra note 45, § 68 ("I]f one undertakes to copy writings or to dig a ditch for me, it is evident that I cannot make him write, or work, against his will, and that his obligation, if he refuses to perform it, must necessarily be resolved into a claim for damages.").
61. NICHOLAS, supra note 45, at 212.
62. BELL ET AL., supra note 33, at 346-47; 2 STARK ET AL., supra note 34, at 591-91. See also Cass. 1e civ., Oct. 20, 1959, Bull. civ. VIII, No. 419 (stating that the amount of the astreinte is not intended to compensate the nonbreaching party for damages, but to compel performance by the reluctant debtor and thus is properly assessed in an amount relative to his fault and means); see also Law No. 72-626 of July 5, 1972, Bulletin legislatif Dalloz [B.L.D.], Aug. 4, 1972, p. 362. Although the French have historically been reluctant to allow state coercion on an individual's freedom by a court order compelling certain conduct, they have overcome such a concern through a practice of employing the astreinte. 2 ZWEIGERT & KÖTZ, supra note 37, at 164 ("The underlying idea is that, man being a free and responsible being, he should not be coerced by the state into behaving in a particular way.").
63. 2 ZWEIGERT & KÖTZ, supra note 37, at 165.
64. Id. at 160.
65. REINHARD ZIMMERMANN, THE NEW GERMAN LAW OF OBLIGATIONS: HISTORICAL AND COMPARATIVE PERSPECTIVES 44 (2005).
66. For background on the new German law of obligations, see ZIMMERMANN, supra note 53; H. Grothe, La Réforme du Droit Allemand des Obligations, 81 REVUE DE DROIT INTERNATIONAL ET DE DROIT COMPARÉ, 243-65 (2004).
67. BGB § 275 II.
68. BGB § 275 III.
69. ZIMMERMANN, supra note 53, at 48-49. Although the above are examples in which specific performance is or is not acceptable under the general obligations law, other specific instances exist in which the law precludes specific performance for certain types of contracts. For example, German law does not allow specific performance for service contracts. MARKESINIS ET AL., supra note 35, at 405.
70. ZIMMERMANN, supra note 53, at 48.
71. Id.
72. 2 ZWEIGERT & KÖTZ, supra note 37, at 161.
73. Reinhard Zimmerman, Savigny's Legacy: Legal History, Comparative Law, and the Emergence of a European Legal Science, 112 L.Q.R. 576, 591 (1996).
74. But see Shael Herman, Specific Performance: A Comparative Analysis (1), 7 EDIN. L. REV. 5, 9-10 (2003) ("For example, Spanish law, thanks to its own traditions, seems decisively committed to specific performance, and provides strong procedural safeguards for achieving it. Both Germany and France may have a commitment to specific performance exceeding that of New York, but neither country seems to as dedicated to be specific relief as Spain.").
75. See United Nations Convention on Contracts for the International Sale of Goods (CISG), arts. 46(1) & 28, Apr. 11, 1980, 1489 U.N.T.S. 3. See Henrik Lando & Caspar Rose, On the Enforcement of Specific Performance in Civil Law Countries, 24 INT'L REV. L. & ECON. 473, 479-80 (2004) (concluding that in 200 cases in which specific performance could have been demanded, only one concerned a demand for specific performance, which was ultimately rejected by the court).
76. For further discussion of specific performance under the CISG, see Shael Herman, Specific Performance: A Comparative Analysis (2), 7 EDIN. L. REV. 194 (2003).
77. COMMENTS AND NOTES TO THE PRINCIPLES OF EUROPEAN CONTRACT LAW (PECL), art. 9:102, n.2, available at http://www.cisg.law.pace.edu/cisg/text/peclcomp62.html. Although it has been argued that the civil law permits damages claims in practice more than it does in theory, the reverse can be said for the common law. That is, "[t]he commentators also generally agree that specific performance is granted [in the common law] more freely today than traditional doctrine suggests." See supra note 42; Eisenberg, supra note 18, at 1017.
78. The following example has been adapted and modified from Northern Indiana Public Service Co. v. Carbon County Coal Co., 799 F.2d 265, 279-80 (7th Cir. 1986).
79. This, of course, assumes that transaction costs are not prohibitive.
80. For an argument that the post-breach negotiation costs are not greater than those that result when damages are the preferred remedy, see Schwarz, supra note 16, at 284-90.
81. NICHOLAS MERCURO & STEVEN G. MEDEMA, ECONOMICS AND THE LAW: FROM POSNER TO POST-MODERNISM 78 (1997).
82. Although it is tempting to equate the concept of disgorgement with restitution, the two are not identical. See, e.g., Craig Rotherham, The Conceptual Structure of Restitution for Wrongs, 66 CAMBRIDGE L.J. 172, 178-81 (2007) (suggesting that restitution involves a concept of returning a gain to which another party was deprived, whereas disgorgement is a concept characterized by the surrendering of a gain even if the other party has been deprived of nothing).
83. See also Ross B. Grantham & Charles Rickett, Disgorgement for Unjust Enrichment?, 62 CAMBRIDGE L.J. 159 (2003) ("Restitution is the giving back of wealth received by a defendant from a claimant . . . [whereas] [disgorgement is the giving up to a claimant of a gain made by a defendant, . . . but received from a third party.").
84. 24 LORD, supra note 18, § 64:2.
85. John D. McCamus, Disgorgement for Breach of Contract: A Comparative Perspective, 36 LOY. L.A. L. REV. 943, 950 (2003);
86. Lionel D. Smith, Disgorgement of the Profits of Breach of Contract: Property, Contract and "Efficient Breach," 24 CANAD. BUS. L.J. 121, 133 (1995).
87. See, e.g., Mathias Siems, Disgorgement of Profits for Breach of Contract: A Comparative Analysis, 7 EDIN. L. REV. 27, 35-40 (2003) (providing for six limited instances in which disgorgement may be appropriate in German law).
88. BGB § 285(I).
89. See, e.g., 2 ZWEIGERT & KÖTZ, supra note 37, at 181-82.
90. ZIMMERMANN, supra note 53, at 60.
91. Bundesgerichtshof [BGH] [Federal Court of Justice] Oct. 24, 1979, 75 Entscheidungen des Bundesgerichtshofes in Zivilsachen [BGHZ] 221 (F.R.G).
92. Id.
93. Id.
94. Dagmar Coester-Waltjen, The New Approach to Breach of Contract in German Law, in COMPARATIVE REMEDIES FOR BREACH OF CONTRACT 138 (Nili Cohen & Ewan McKendrick eds., 2005).
95. See also Konrad Rusch, Restitutionary Damages for Breach of Contract: A Comparative Analysis of English and German Law, 118 S. AFRICAN L.J. 59, 71 (2001) (suggesting that resale of a portrait to a second buyer at a higher price requires the seller to disgorge the proceeds of the second sale to the first buyer).
96. Coester-Waltjen, supra note 78, at 138; Rusch, supra note 78, at 73.
97. Bundesgerichtshof [BGH] [Federal Court of Justice] May 10, 2006, 167 Entscheidungen des Bundesgerichtshofes in Zivilsachen [BGHZ] 312 (F.R.G.).
98. Ulrich Wackerbarth, § 285 BGB und die Lehre vom effizienten Vertragsbruch, in 10 ZEITSCHRIFT FÜR DAS GESAMTE SCHULDRECHT (ZGS) 369-71 (2006).
99. Id.
100. Id.
101. Id.
102. Id. ("Als Rechtfertigung für die Entscheidung kommt letzlich nur die ökonomische Lehre vom effizienten Vertragsbruch in Frage.")
103. Steven Shavell, Damage Measures for Breach of Contract, BELL J. ECON. 466, 470 (1980).
104. 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) ("Optimal systematic rules establishing post-breach compensation may require some limiting assumptions concerning the extent of the harm caused by contract breach.").
105. Eisenberg, supra note 18, at 989-96; Schwartz, supra note 16, at 276; Shavell, supra note 12, at 450-52. Perillo, supra note 9, at 1093 ("In general, contract damages do not fully compensate the party who is the victim of a breach."); Aristides N. Hatzis, Civil Contract Law and Economic Reasoning - An Unlikely Pair?, in THE ARCHITECTURE OF EUROPEAN CODES AND CONTRACT LAW 159, 160 (8 Private Law in European Context Series, Stefan Grundmann & Martin Schauer eds., 2006) ("For a breach to be efficient (i.e., socially desirable), the compensation must be full . . . . Nevertheless, even law and economics scholars acknowledge that expectation damages which are actually awarded by courts are typically imperfect.").
106. (1854) 156 Eng. Rep. 145 (Ex). For discussion and critique of the rule announced in Hadley, see GRANT GILMORE, THE DEATH OF CONTRACT 49-53 (1974) (concluding that "the essential novelty of the Hadley formula . . . was its affirmative statement that, subject to the limitation of foreseeability and provided only that all the 'special circumstances' were communicated, lost profits and other consequential damages caused by breach of a contractual duty were recoverable.").
107. RESTATEMENT OF CONTRACTS § 330 (1932) (emphasis added).
108. 24 LORD, supra note 18, at § 64:2.
109. 1 POTHIER, supra note 31, at 181 ("Lorsqu'on ne peut reprocher au débiteur aucun dol . . ., le débiteur n'est tenu que des dommages et intérêts qu'on a pu prévoir.") ; see also ZIMMERMAN, supra note 11, at 830 ("Pothier's views . . . were avidly received by the 19th-century English courts and formed the basis . . . of the contemplation doctrine, as formulated in the celebrated decision of Hadley v. Baxendale."); Joseph M. Perillo, Robert J. Pothier's Influence on the Common Law of Contract, 11 TEX. WESLEYAN L. REV. 267, 272 (2005) (stating that the thrust of Pothier's view was adopted "by the French Code Civil and by the Hadley court").
110. DIG. 19.1.13 (Ulpian, Edict 32); See also DIG. 19.1.37 (Paul, Plautius 7) ("Since, as it is only just that a purchaser in good faith should not be injured by the fraud of another, so it is unjust that the vendor himself should profit by his own fraud."); DIG. 19.2.19 (Ulpian, Edict 32) ("[I]f you rented a tract of land for pasturage in which poisonous herbs grew; . . . [and] if any of the cattle died, or were depreciated in value, and you knew of the existence of the herbs, you must indemnify the lessee to the amount of his interest; and if you were ignorant of their existence, you cannot collect the rent.").
111. DIG. 19.1.21.3 (Paul, Edict 33).
112. But even then, "[n]owhere . . . did the texts of Justinian contain a systematic explanation of the reasons for the rules of contract law or for the classification of types of contracts. Nowhere was there stated a theory or even a general concept of contractual liability as such." Harold J. Berman, The Religious Sources of General Contract Law: An Historical Perspective, 4 J. L. & RELIGION 103, 108 (1986).
113. FRANCIS DE ZULUETA, THE ROMAN LAW OF SALE 41 (1945) ("Justinian enacted that the interesse should never be assessed at more than double the price and, in general, that unduly speculative damages must not be allowed. It is precisely on this latter point that we need guidance, but the Digest gives us little, probably because the jurists differed and Justinian has cut out their controversies.").
114. CODE JUST. 7, 47, 1 (Justinian 530).
115. Berman, supra note 95, at 108-09.
116. ZIMMERMAN, supra note 11, at 831.
117. R.C. VAN CAENEGEM, AN HISTORICAL INTRODUCTION TO PRIVATE LAW 40 (D.E.L. Johnston trans., 1992);
118. PETER STEIN, LEGAL INSTITUTIONS: THE DEVELOPMENT OF DISPUTE SETTLEMENTS 84-85 (1984) (discussing DuMoulin's exposition of feudal tenure as influenced by his knowledge of the Commentators). Despite his use of Roman law, DuMoulin for political reasons was opposed to the imposition of Roman law as the law of France.
119. See VAN CAENEGEM, supra, at 40. For further elaboration on the views of DuMoulin, see JEAN-LOUIS THIREAU, CHARLES DUMOULIN (1500-1566): ETUDES SUR LES SOURCES, LA MÉTHODE, LES IDÉES POLITIQUES ET ÉCONOMIQUES D'UN JURISTE DE LA RENAISSANCE (1980).
120. CAROLI MOLINAEI, TRACTUTUS DE EO QUOD INTEREST ET HUGONIS DONELLI, COMENTARII IN CODICEM JUSTINIANI, 156, no. 155 (1973).
121. See also J.L. Barton, Contractual Damages and the Rise of Industry, 7 OXFORD J. LEGAL STUD. 40-41 (1987).
122. Ulpian, endorsing the definition of Labeo, defined dolus as "every kind of cunning, trickery, or contrivance practiced in order to cheat, trick, or deceive another." DIG. 4.3.1.2 (Ulpian, Edict 11). In later times, however, the concept of dolus was broadened and included mere intentional wrongdoing. DIG. 4.3.34 (Ulpian, Sabinus 42) ("Where you have allowed me to take stone from your land and I have incurred expense on this account and then you do not allow me to remove anything, no action other than that for [dolus] will lie."). For further exposition of the meaning and applicability of dolus, see generally WILLIAM W. BUCKLAND, A TEXT-BOOK OF ROMAN LAW FROM AUGUSTUS TO JUSTINIAN 594-95 (Peter Stein ed., 3d ed. 1963).
123. Barton, supra note 101, at 40-41.
124. Dawson, supra note 20, at 509.
125. POTHIER, supra note 31, § 164.
126. Id.
127. Id. § 165.
128. Id. § 167.
129. Id.
130. POTHIER, supra note 45, § 73.
131. C. CIV. art. 1150.
132. Id. art. 1151.
133. 3 C.-B.-M. TOULLIER, LE DROIT CIVIL FRANÇAIS § 224, 142 (1846).
134. Denis Tallon, Remedies: French Report, in CONTRACT LAW TODAY: ANGLO-FRENCH COMPARISONS 276-77 (Donald Harris & Denis Tallon eds., 1989) (citing Cass. 1e civ., Feb. 4, 1969, Bull. civ. II, No. 60).
135. See also PHILIPE MALAURIE ET AL., DROIT CIVIL: LES OBLIGATIONS, no. 967, at 489 (2004);
136. JEAN CARBONNIER, DROIT CIVIL: LES OBLIGATIONS § 156, at 298 (1992).
137. Patton v. Mid-Continent Systems, 841 F.2d 742 (7th Cir. 1988) (Posner, J.). But see Perillo, supra note 9, at 1097 ("[C]ourts are prone to relax the standard of certainty in contract cases where the breach is willful.").
138. For a discussion on the reception of Roman law in Germany, see Georg Dahm, On the Reception of Roman and Italian Law in Germany, in PRE-REFORMATION GERMANY 282-315 (Gerald Strauss ed., 1972).
139. JAMES GORDLEY, FOUNDATIONS OF PRIVATE LAW 410 (2006). But see id. at 411 (stating that § 254 of the BGB "functions much like Pothier's rule").
140. Id. at 410-11.
141. MARKESINIS ET AL., supra note 35, at 472.
142. Id. at 479.
143. BGB § 249(I).
144. MARKESINIS ET AL., supra note 35, at 480.
145. BGB § 252.
146. But see GORDLEY, supra note 117, at 410 (discussing various interpretations of "dol" under French law over the years).
147. U.C.C. § 2-713 ("[T]he measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article . . ., but less expenses saved in consequence of the seller's breach."); 24 LORD, supra note 18, § 64:4 (stating that "damages are generally measured as of the date of breach").
148. U.C.C. § 2-712.
149. Cass. 2e civ., June 24, 1998, Bull. civ. II, No. 226; Cass, civ., July 15, 1943, JCP 1943 II No. 52. GUENTER H. TREITEL, REMEDIES FOR BREACH OF CONTRACT: A COMPARATIVE ACCOUNT 121 (1988).
150. NICHOLAS, supra note 45, at 226.
151. Id. at 226.
152. BELL ET AL., supra note 33, at 349.
153. 24 LORD, supra note 18, § 64:27 ("[I]t has been said that a plaintiff is ordinarily under a duty to mitigate damages . . . . [T]he plaintiff simply cannot recover those damages that it could have avoided. Damages which the plaintiff might have avoided with reasonable effort without undue risk, expense, burden, or humiliation will be considered either as not having been caused by the defendant's wrong or as not being chargeable against the defendant.").
154. NICHOLAS, supra note 45, at 226 ("French law does not think in terms of the Common law's 'duty' to mitigate."); BELL ET AL., supra note 33, at 350-51 (describing the position of French law on the duty to mitigate as "distinctly ambiguous"); TREITEL, supra note 127, at 181 ("Only French law appears not to recognize the existence of any 'duty' to make a substitute contract at all.").
155. C. CIV. art. 1144 ("The creditor may also, in case of inexecution, be authorized to have the obligation executed himself at the expense of the debtor . . . .").
156. BELL ET AL., supra note 33, at 350-51.
157. Cass. 2e civ., 19 June 2003, Bull. civ. II, No. 203. It is interesting to note that a 2005 Project to Reform the Law of Obligations in France prepared by a group led by Pierre Catala has proposed the adoption of the duty to mitigate damages on the part of the victim. See Avant-projet de réforme du droit des obligations et du droit de la prescription, Rapport à Monsieur Pascal Clément, Garde des Sceaux, Ministre de la Justice, 22 Septembre
158. See, e.g., Cour d'appel [CA] [regional court of appeal] Paris, Jan. 7, 1924, D.P. II, 143 (holding that a customer could not recover from a gas company for low gas pressure when he failed to notify the gas company of the problem).
159. See, e.g., TREITEL, supra note 127, at 191-92.
160. BGB § 252.
161. Id.
162. MARKESINIS ET AL., supra note 35, at 480-81.
163. Id.
164. BGB § 254(2). As German scholars have noted, "If the plaintiff has omitted to avert or mitigate the loss, the award of damages is . . . reduced accordingly." MARKESINIS ET AL., supra note 35, at 475-76. See also Bundesgerichtshof [BGH] [Federal Court of Justice] Nov. 15, 1967, 49 Entscheidungen des Bundesgerichtshofes in Zivilsachen [BGHZ] 56 (F.R.G.) (finding that a landlord's action in securing another tenant who redecorated the apartment was "not simply performing his duty to mitigate his loss" and thus the previous tenant was still liable for the cost of redecoration).
165. For a brief comparative overview of this topic, see Int'l L. Comm'n, Second Report on State Responsibility, Addendum: Interference with Contractual Rights: A Brief Review of the Comparative Law Experience, U.N. Doc. A/CN.4/498/Add.3 (Apr. 1, 1999) (prepared by James Crawford).
166. Remington, supra note 15, at 647.
167. RESTATEMENT (SECOND) OF TORTS, § 766 (1979).
168. Id. § 767.
169. Id. § 766, cmt m.
170. Id. § 766, cmt. m, illust. 3.
171. Remington, supra note 15, at 664; (citing Dan. B. Dobbs, Tortious Interference with Contractual Relationships, 34 ARK. L. REV. 335, 343 (1980);
172. Harvey S. Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U. CHI. L. REV. 61 (1982)).
173. Della Penna v. Toyota Motor Sales, U.S.A., Inc., 902 P.2d 740, 751 (Cal. 1995).
174. For a thorough discussion of the third-party interference with contracts under French law, see Vernon V. Palmer, A Comparative Study (From a Common Law Perspective) of the French Action for Wrongful Interference with Contract, 40 AM. J. COMP. L. 297 (1992).
175. C. CIV. art. 1583.
176. Id. arts. 2279 & 1141.
177. Id. art. 1141.
178. Id. art. 1382.
179. BELL ET AL., supra note 33, at 370.
180. Id.
181. Cass. 3e civ., July 8, 1975, Bull. civ. III, No. 249.
182. BGB § 929.
183. Hatzis, supra note 88, at 20.
184. BGB § 826.
185. BASIL S. MARKESINIS, A COMPARATIVE INTRODUCTION TO THE GERMAN LAW OF TORTS 660 (2d ed. 1990) ("Mere 'co-operation' in the breach of a contract with a third party will not suffice.").
186. Bundesgerichtshof [BGH] [Federal Court of Justice] Oct. 19, 1993, 1994 N.J.W. 128, excerpted and translated in WALTER VAN GERVEN ET AL., TORT LAW 232-33 (2000).
187. Id.
188. Id.
189. Id.
190. Id.
191. Id.
192. Id.
193. VAN GERVEN ET AL., supra note 163, at 233.
194. See, e.g., Edward A. Snyder & James W. Hughes, The English Rule for Allocating Legal Costs: Evidence Confronts Theory, 6 J. L. ECON. & ORG. 345 (1990) (concluding that fee shifting increases litigation).
195. But see RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 590 (2003) ("[I]t is unclear whether on balance indemnity raises, lowers, or does not change the litigation rate.").
196. See generally BELL ET AL., supra note 33, at 107-08.
197. N.C.P.C. art. 696, available at http://www.legifrance.gouv.fr/ html/codes_traduits/ncpcatext. htm#CHAPTER%20I%20THE%20BURDEN%200F%20TAXABLE%CHARGES.
198. Id. art. 697.
199. Id. art. 700.
200. Id.
201. BELL ET AL., supra note 33, at 107.
202. Id.
203. Id.
204. Astrid Stadler & Wolfgang Hau, The Law of Civil Procedure, in AN INTRODUCTION TO GERMAN LAW 377 (Mathias Reimann & Joachim Zekoll eds., 2d ed. 2005).
205. See generally NORBERT HORN ET AL., GERMAN PRIVATE AND COMMERCIAL LAW: AN INTRODUCTION 48-50 (Tony Weir trans., 1982).
206. German Code of Civil Procedure § 91, in GERMAN COMMERCIAL CODE & CODE OF CIVIL PROCEDURE 211-12 (Charles E. Stewart trans., 2001).
207. Stadler & Hau, supra note 180, at 377.
208. HORN ET AL., supra note 180, at 48.
209. Werner Pfennigstorf, The European Experience with Attorney Fee Shifting, 47 LAW & CONTEMP. PROBS. 37, 60 (1984); See also id. at 78-82.
210. For economic analysis of the "loser pays" rule, see POSNER, supra note 171, at 587-91.
211. RICHARD A. POSNER, LAW AND LEGAL THEORY IN ENGLAND AND AMERICA 78 (1996).
212. JOHN HENRY MERRYMAN, THE CIVIL LAW TRADITION: AN INTRODUCTION TO THE LEGAL SYSTEMS OF WESTERN EUROPE AND LATIN AMERICA 2 (2d ed. 1985).
213. Id. at 149. See also John Henry Merryman, On the Convergence (and Divergence) of the Civil Law and the Common Law, 17 STAN. J. INT'L L. 357, 381 (1981).
214. Holmes, supra note 8, at 457.
215. In writing about Germany, one scholar has noted that "the role of the judiciary has been strictly confined to the interpretation of such norms as the legislature formulated." Christian Kirchner, The Difficult Reception of Law and Economics in Germany, 11 INT'L REV. L. & ECON. 277, 284 (1991). Moreover, it has been argued that from a methodological point of view, German judges are more dogmatic in their constrained role of application of legal rules in the face of a pre-eminent legislature, whereas judges in the United States "gain power by adopting social science approaches that help strengthen the acceptability of court decisions" and thus maintain the balance of power between branches of government. Id. In France, judges are prohibited from making general law injudicial opinions. C. Civ. art. 5 ("Judges are forbidden to pronounce decisions by way of general and regulative disposition on causes which are submitted to them.").
216. On the role and function of judges in France, see Claire M. Germain, Approaches to Statutory Interpretation and Legislative History in France, 13 DUKE J. COMP. & INT'L L. 195 (2003).
217. JAMES C. CARTER, THE PROVINCE OF THE WRITTEN AND UNWRITTEN LAW 48-49 (1889).
218. 1 FREDERICK HAYEK, LAW, LEGISLATION AND LIBERTY: RULES AND ORDER 94 (1973);
219. see also Paul G. Mahoney, The Common Law and Economic Growth: Hayek Might Be Right, 30 J. LEGAL STUD. 503, 523 (2001) (arguing that "the association between common law and [economic] growth . . . stems from a more fundamental divergence between the security of property and contract rights in [common law and civil law] systems").
220. WORLD BANK, DOING BUSINESS IN 2004: UNDERSTANDING REGULATION xiv (2004). The conclusions of this report have been subject to serious criticism. See, e.g., Les Droits de Tradition Civiliste en Question: À propos des Rapports Doing Business de la Banque Mondiale (2006), available at http://www. henricapitant.org/IMG/pdf/vol.2.pdf.
221. Frederic William Maitland, English Law and the Renaissance, in 1 SELECTED ESSAYS IN ANGLO-AMERICAN LEGAL HISTORY 195 (1907).
222. RONALD DWORKIN, LAW'S EMPIRE 228-38 (1986).
223. MERCURO AND MEDEMA, supra note 67, at 6-7. ("The second half of the nine-teenth century witnessed a positive, scientific movement across many intellectual disciples, wherein these various disciplines attempted to apply formalistic principles that would give them the status accorded to the natural sciences. The legal manifestation of this more general movement was doctrinalism, which is concerned with the law as it is, apart from reference to the religious, metaphysical, or socioeconomic principles of earlier eras.").
224. OLIVER WENDELL HOLMES, JR., THE COMMON LAW 1-2 (Dover Publications 1991) (1881).
225. Roscoe Pound, Mechanical Jurisprudence, 8 COLUM. L. REV. 605, 605 (1908).
226. Hynes v. New York Central R.R. Co., 231 N.Y. 229 (N.Y. Ct. App. 1921) (Cardozo, J.); See also BENJAMIN CARDOZO, THE NATURE OF THE JUDICIAL PROCESS (1921).
227. According to Pound: The sociological movement in jurisprudence is a movement for pragmatism as a philosophy of law; for the adjustment of principles and doctrines to the human conditions they are to govern rather than to assumed first principles; for putting the human factor in the central place and relegating logic to its true position as an instrument. POUND, supra note 198, at 609-10.
228. MERCURO & MEDEMA, supra note 67, at 9.
229. Id. at 10.
230. Id.
231. Id. at 13.
232. UGO MATTEI, COMPARATIVE LAW AND ECONOMICS 85 (1997) (arguing that the success of law and economics in America is due in part to the reaction against American realism).
233. Posner, supra note 6, at 74.
234. GILMORE, supra note 89, at 3.
235. For example, law and economics scholarship has been available in German since at least 1978. Viktor Winkler, Review, Some Realism and Rationalism: Economic Analysis of Law in Germany, 6 GERM. L.J. 1 (2005) (discussing the collection and publication in German of the works of Calabresi, Coase, Posner, and others and commenting on the publication of a German law student reader on the topic of Economic Analysis of Law (i.e., Textbook of the Economic Analysis of Private Law)). In terms of exposure, American scholarship and law is more available today in continental Europe than ever before with American law influencing countless European legal reform efforts. MATTEI, supra note 205, at 86. In fact, some have even suggested that "civil law is not only friendlier, but also more amenable to economic analysis than common law." See Hatzis, supra note 88, at 161 (discussing the potential receptivity of Romano-German law to the doctrine of efficient breach and the willingness of European courts to enforce liquidated damage clauses).
236. Hatzis, supra note 88, at 160.
237. Id.
238. Id.
239. Posner, supra note 6, at 67.
240. But see Carter, supra note 191, at 37 (stating the following in reference to civilian jurisdictions, "What progress would be possible in law, if justice could be frozen into a rigid body of unchangeable rules?").
241. Jean Louis Bergel, Principle Features and Methods of Codification, 48 LA. L. REV. 1073, 1074, n.5 (1988).
242. 1 P. A. FENET, RECUEIL COMPLET DES TRAVAUX PRÉPARATOIRES DU CODE CIVIL 463, 470 (1968) (1827);
243. Alain Levasseur, Code Napoleon or Code Portalis?, 43 TUL. L. REV. 762, 769-72 (1969).
244. In fact, courts at the level of the Cour de Cassation and the Bundesgerichtshof are not under the "constraint that their decisions may be revised by courts at higher levels," although their "power and prestige" may be at risk to the extent they introduce new methods of legal interpretation focusing on external values, at least to the extent that those values are not generally accepted ones. Kirchner, supra note 190, at 285.
245. See, e.g., MARKESINIS ET AL., supra note 35, at 329. For background on the legal issues involved in this phenomenon, see John Dawson, The Effects of Inflation on Private Contracts: Germany, 33 MICH. L. REV. 171-238 (1934).
246. HORN ET AL., supra note 180, at 140 (describing the good faith provision of the BGB, § 242, as "one of the most astonishing phenomena in the Code.").
247. Bundesgerichtshof [BGH] [Federal Court of Justice] Nov. 28, 1923, 107 Entscheidungen des Reichsgerichts in Zivilsachen [RGZ] 78 (F.R.G.), excerpted and translated in MARKESINIS ET AL., supra note 35, App. I, at 801-03.
248. BGB § 242.
249. Simon Whittaker & Reinhard Zimmermann, Good Faith in European Contract Law: Surveying the Legal Landscape, in GOOD FAITH IN EUROPEAN CONTRACT LAW 22 (Reinhard Zimmermann & Simon Whittaker eds., 2000).
250. Other notable judicial inventions include the astreinte procedure discussed above, see NICHOLAS, supra note 45, at 215-19, and third-party liability for interference with contracts, see Palmer, supra note 151, at 300 (describing this form of liability as "almost wholly judge-made, a praetorian product in all respects save the general tort provisions of the Code Civil into which it needed to be absorbed.").
251. 2 ZWEIGERT & KÖTZ, supra note 37, at 353.
252. C. CIV. art. 1384.
253. See id. BELL ET AL., supra note 33, at 372-73.
254. Cass, civ., Feb. 21, 1927, Bull. civ. II, No. 30. See also 2 ZWEIGERT & KÖTZ, supra note 37, at 354.
255. RENÉ DAVID, FRENCH LAW: ITS STRUCTURE, SOURCES, AND METHODOLOGY 179 (Michael Kindred trans., 1972).
256. A. Esmein, Jurisprudence et Doctrine, REVUE TRIMESTRIELLE DE DROIT CIVIL 5 (1902).
257. MATTEI, supra note 205, at 83.
258. James E. Herget & Stephen Wallace, The German Free Law Movement as the Source of American Legal Realism, 73 VIRG. L. REV. 399, 401 (1987) ("[T]he realists did not originate legal skepticism at all. Instead, they discovered an attic of ideas that had blossomed a quarter-century earlier in Germany. They came upon this attic through the guiding hands of Roscoe Pound, Benjamin Cardozo, John Chipman Gray, and the Association of American Law Schools. That more remote but nevertheless fully elaborated source of realism was the German 'free law' movement of 1899 to 1912.").
259. FRANÇOIS GÉNY, MÉTHODE D'INTERPRÉTATION ET SOURCES EN DROIT PRIVÉ POSITIF, no. 156, at 354 (La. State L. Institute trans., 2d ed. 1954).
260. Id. at no. 156, at 355 ("For the purpose in either case is to satisfy as well as possible, justice and social usefulness through an appropriate rule. Thus I would not hesitate to lay down the following directive for the judge, to guide him in the absence or insufficience of formal sources: that he should shape his decision about the law from the same standpoint as would a legislator, regulating the matter.").
261. RUDOLF VON IHERING, SCHERZ UND ERNST IN DER JURISPRUDENZ, 252-54 (1921),
262. excerpted and translated in ARTHUR TAYLOR VON MEHREN & JAMES RUSSELL GORDLEY, THE CIVIL LAW SYSTEM 70-71 (1977).
263. See generally FRANZ WIEACKER, A HISTORY OF PRIVATE LAW IN EUROPE WITH PARTICULAR REFERENCE TO GERMANY 442-62 (Tony Weir trans., 1995).
264. Herget & Wallace, supra note 230, at 401 ("The free law movement in Germany never attained the status of a 'school' of thought . . . . It was much shorter lived, and its enthusiasm and insights were depleted before it came to any resolution of the problems it recognized.").
265. Kirchner, supra note 190, at 284-85.
266. Cass. 2e civ., June 5, 1957, Bull. civ. VI, No. 418.
267. Id.
268. Lionel Montagné, Law and Economics in France, in 1 ENCYCLOPEDIA OF LAW AND ECONOMICS 150 (1999).
269. Kirchner, supra note 190, at 286.
270. In a number of senses, however, the English legal culture is closer to the continental legal culture than it is to American legal culture. For example, English law tends to be more doctrinal in approach than American law, making it more akin to the legal approach of continental countries. See, e.g., POSNER, supra note 186, at 21 ("The important difference in terms of substance rather than mere form, so far as receptivity to theory is concerned, and it is a difference between the United States and the rest of the world, concerns receptivity not to legal conceptualism but to social science, to which the Germans, for example, are as hostile as the English."); But see id. at 59 (suggesting that English contract law may be ahead of American law in terms of conforming to principles of economics). Moreover, English law also maintains a "loser pays" system, which would serve to increase the cost of breaches and thus correspondingly reduce the number of breaches deemed efficient. To the extent a breacher might be forced to pay the attorney's fees of his opponent if successfully sued, the cost of breaching would rise.
271. In the English system, the standard remedy for breach of contract is an award of expectation damages (not specific performance) valued as of the time of breach. Duties to mitigate, just as in the United States, exist, as does the concept of liability only for foreseeable damages.
272. See, e.g., James Edelman, Restitutionary Damages and Disgorgement for Breach of Contract, 2000 RESTITUTION L. REV. 129.
273. Id. See also Anthony T. Kronman, Specific Performance, 45 U. CHI. L. REV. 351, 376-82 (1978) (discussing the constructive trust and compelled specific performance as legal remedies when real property is sold to a purchaser and before delivery is conveyed to a second purchaser who offers a better deal).
274. Attorney General v. Blake, [2001] 1 A.C. 268; see also WWF-World Wide Fund v. World Wrestling Federation [2006] F.S.R. 38 (High Court of Justice). Prior to the Blake case, however, English law's hostility to the idea of disgorgement for breach seemed clear. See, e.g., Surrey County Council v. Bredero Homes, Ltd, [1993] 1 W.L.R. 1361, 1365 ("Such damages may, in an appropriate case, cover profit which the injured plaintiff has lost, but they do not cover an award, to a plaintiff who has himself suffered no loss, of the profit which the defendant has gained for himself by his breach of contract."). See also Lionel D. Smith, Disgorgement of the Profits of Breach of Contract: Property, Contract and "Efficient Breach," 24 CANAD. BUS. L. J. 121, 123 (1995) ("The orthodox view is that the only response available for breach of contract is compensation."); McCamus, supra note 70, at 948 ("The traditional common law approach is that relief in the disgorgement measure is not available in a claim for damages for breach of contract."). In fact, in the Surrey County Council case, Lord Justice Steyen rejected the disgorgement idea in part for economic reasons. Surrey County Council, 1 W.L.R. at 1370 ("In any event such a widespread availability of restitutionary remedies will have a tendency to discourage economic activity in relevant situations.").
275. Blake, 1 A.C. at 283.
276. This is not to suggest that disgorgement is always available - quite the contrary. Lord Nicholls in Blake was clear the relief of disgorgement was only available "exceptionally" and when "a just response to breach of contract so requires." Id. at 284. On the difficultly of ascertaining what circumstances are "exceptional," see David Campbell & Philip Wylie, Ain't No Telling (Which Circumstances are Exceptional), 2003 CAMBRIDGE L.J. 605. The Court of Appeals in Experience Hendrix, LLC v. PPX Enterprises, Inc. declined to extend the disgorgement remedy in Blake to a situation involving the profitable breach of a settlement agreement by the defendant because the plaintiff "had no evidence . . . to show or quantify any financial loss suffered" as a result of the breach. Experience Hendrix LLC v. PPX Enterprises Inc., [2003] EWCA Civ. 23. The court instead awarded a "reasonable sum . . . as might reasonably have been demanded by" the plaintiff "as a quid pro quo to permit" the defendant's conduct. Id.
277. LA. CIV. CODE art. 1986 (1987) (stating that "the court shall grant specific performance" for breach of obligations to deliver a thing, not to do an act, or to execute an instrument, unless specific performance would be impracticable) (emphasis added). See also Girault v. Feucht, 41 So. 572 (1906).
278. LA. CIV. CODE art. 1997 (1987) ("[A]n obligor in bad faith is liable for all the damages, foreseeable or not, that are a direct consequence of his failure to perform."). Bad faith in this context is "a designed breach of the contract prompted by some interest or ill will." SAÚL LITVINOFF, THE LAW OF OBLIGATIONS: PUTTING IN DEFAULT AND DAMAGES, in 6 Louisiana Civil Law Treatise Series, § 5.20, at 135 (1999). "Because of that intentional element, an obligor who commits [an efficient] breach will normally be automatically regarded as an obligor in bad faith." LITVINOFF, supra § 5.22, at 135.
279. Scottish Law Commission, Discussion Paper on Remedies for Breach of Contract No. 109, 50 (Apr. 1999) ("Specific implement is a primary remedy for breach of contract and not, as in the equivalent English remedy of specific performance, a remedy which is not available if damages would be an adequate remedy. In Scotland it is not in the option of the defender to pay damages rather than perform the contractual obligation. There are, however, certain situations in which a decree for specific implement will normally be refused."). Retail Park Investments, Ltd. v. The Royal Bank of Scotland plc (No. 2), 1196 S.C. 227, 1996 S.L.T. 669 (1996) ("[S]pecific implement was the primary remedy for pursuers in this type of situation; the alternative remedy of damages would not be a satisfactory and sufficient remedy . . . .").
280. But see William W. McBryde, Remedies for Breach of Contract, 1 EDIN. L. REV. 43, 50 (1996) ("In Scots law the pursuer has a choice and neither damages nor implement (nor any other remedy) have automatic priority.");
281. William W. McBryde, The Scots Law of Breach of Contract: A Mixed System in Operation, 6 EDIN. L. REV. 5, 23 (2002) (stating that the idea of specific implement being a primary remedy in Scots law "is a myth");
282. Hector L. MacQueen, Remedies for Breach of Contract: The Future Development of Scots Law in its European and International Context, 1 EDIN. L. REV. 200, 204 (1997) ("[T]here seem to be few cases in practice where the remedy is sought, never mind granted.");
283. MICHAEL C. METSON ET AL., THE SCOTTISH LEGAL TRADITION 16 (1991) ("In practice therefore the normal remedy is a court award of a sum of money as damages . . . .").
284. Scotland's mixed system is derived from a voluntary act of Union with England in 1707, whereby the public law of both Scotland and England is common law and private law and criminal law in Scotland remain Scottish. See generally VERNON VALENTINE PALMER, MIXED JURISDICTIONS WORLDWIDE: THE THIRD LEGAL FAMILY 29-30 (2001).
285. MERRYMAN, supra note 187, at 149.
286. Id. at 149.
287. James Gordley, Book Review, 80 TUL. L. REV. 325, 329 (2005)
288. (reviewing SIR BASIL MARKESINIS, COMPARATIVE LAW IN THE COURTROOM AND CLASSROOM: THE STORY OF THE LAST THIRTY-FIVE YEARS (2000)).