Breach is for suckers

Vanderbilt Law Review

Volumn 63, Issue 4, 2010, Pages 1003-1045

  Wilkinson Ryan, Tess ^a   Hoffman, David A ^b  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b TEMPLE UNIVERSITY   (United States)

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[No Author keywords available]

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EID: 78650845742     PISSN: 00422533     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (189)

1. Oliver Wendell Holmes, Jr., Justice, Supreme Judicial Court of Mass., The Path of the Law, Address at the Dedication of the New Hall at Boston University School of Law (Jan. 8, 1897), in 10 HARV. L. REV. 457, 462 (1897)
2. see infra notes 9-20 and accompanying text.
3. Tess Wilkinson-Ryan & Jonathan Baron, Moral Judgment and Moral Heuristics in Breach of Contract, 6 J. EMPIRICAL LEGAL STUD. 405, 405 (2009).
4. Id. at 413, 417, 422.
5. E.g., id. at 420-21 (finding in an empirical study of the moral implications of contractual breach that "[s]ubjects distinguished between cases in which the promisor breaches in order to avoid a loss of some kind and in cases in which the promisor has been given a better offer; they imposed higher damages on the latter and indicated that he should feel guiltier for the breach").
6. For a thorough overview of the role of reciprocity in legal decision-making, see Dan M. Kahan, The Logic of Reciprocity: Trust, Collective Action, and Law, 102 MICH. L. REV. 71 (2003).
7. Id. at 73-74.
8. See infra notes 27-40 and accompanying text.
9. See infra notes 27-30.
10. Lon L. Fuller & William R. Perdue, The Reliance Interest in Contract Damages, 46 YALE L.J. 52, 54 (1936).
11. The point is often expressed. See, e.g., George M. Cohen, The Fault Lines in Contract Damages, 80 VA. L. REV. 1225, 1228-29 (1994) (discussing reasons for undercompensatory expectation awards)
12. Daniel A. Farber, Reassessing the Economic Efficiency of Compensatory Damages for Breach of Contract, 66 VA. L. REV. 1443, 1444-45 (1980) (asserting that "every prospective plaintiff is not fully compensated" and that "contracts are underenforced");
13. Stewart Macaulay, The Reliance Interest and the World Outside the Law Schools' Doors, 1991 WIS. L. REV. 247, 251-53 (calling litigation an "expensive game of chance" and disparaging expectation as an "ideology," not a reality).
14. Other candidates occasionally vie to join the trinity. See, e.g., Eyal Zamir, The Missing Interest: Restoration of the Contractual Equivalence, 93 VA. L. REV. 59, 62 (2007) (advocating for awards based on a restoration interest whereby "courts and legislatures strive to put the injured party in a position similar to the one she would have occupied had the parties made and performed a contract in which their obligations were adjusted to the actual performance by the breaching party, while maintaining the contractual equivalence in terms of the agreed value of performance, the chronological relation between their respective obligations, etc."). Richard Craswell, on the other hand, would reduce the trinity by refocusing on expectation alone.
15. See Richard Craswell, Against Fuller and Perdue, 67 U. CHI. L. REV. 99, 109-11 (2000) (proposing that damages be understood as above expectation, approximating "true expectation" and below expectation).
16. Zamir, supra note 11, at 66.
17. Id.
18. See generally Leo Katz, What to Compensate? Some Surprisingly Unappreciated Reasons Why the Problem Is So Hard, 40 SAN DIEGO L. REV. 1345, 1360-62 (2003) ('The expectation entitlement seems a good deal more ethereal than the entitlement not to be subjected to slander, or alienation of affections, or the intentional infliction of emotional distress.").
19. Fuller & Perdue, supra note 9, at 57.
20. Id.
21. See id. at 58 (concluding that "though it may be assumed that the impulse to assuage disappointment is one shared by those who make and influence the law, this impulse can hardly be regarded as the key which solves the whole problem of the protection accorded by the law to the expectation interest").
22. Id. at 57-58.
23. Id. at 60-61.
24. Generally speaking, contract law was, until quite recently, a field marked by a lack of sustained empirical study.
25. See Robert A. Hillman, The Limits of Behavioral Decision Theory in Legal Analysis: The Case of Liquidated Damages, 85 CORNELL L. REV. 717, 718 (2000) (explaining difficulties in importing behavioral theory into contract law theory)
26. Russell Korobkin, Empirical Scholarship in Contract Law: Possibilities and Pitfalls, 2002 U. ILL. L. REV. 1033, 1036 ("[A]lthough there is a very large body of empirical studies of contracting, there is extremely little empirical contract law scholarship being produced in the legal academy today.").
27. Mara Kent, The Common-Law History of Non-Economic Damages in Breach of Contract Actions Versus Willful Breach of Contract Actions, 11 TEX. WESLEYAN L. REV. 481, 492-93 (2005)
28. Alan Schwartz, The Myth that Promisees Prefer Supracompensatory Remedies: An Analysis of Contracting for Damage Measures, 100 YALE L.J. 369, 391 (1990).
29. E.g., Diesen v. Samson, [1971] S.L.T. (Sh. Ct.) 49 (Scot.) (providing recovery for breach of contract by a wedding photographer that resulted in emotional injury to the plaintiff).
30. McConnell v. U.S. Express Co., 146 N.W. 428, 437 (Mich. 1914).
31. Lamm v. Shingleton, 55 S.E.2d 810, 813-14 (N.C 1949) (holding that damages for mental anguish were appropriate where workmen were "on notice that a failure on their part to inter the body properly would probably produce mental suffering" on the part of plaintiff widow).
32. Mark B. Wessman, Recent Defenses of Consideration: Commodification and Collaboration, 41 IND. L. REV. 9, 15 n.52 (2008).
33. For a good overview of such normative work, see Craswell, supra note 11, at 107-36.
34. See David A. Hoffman & Michael P. O'Shea, Can Law and Economics Be Both Practical and Principled?, 53 ALA. L. REV. 335, 340-45 (2002) (describing wealth maximization as the main principled norm for mainstream law and economics).
35. MITCHELL POLINSKY, AN INTRODUCTION TO LAW AND ECONOMICS 31-34 (1989) (describing how an expectation remedy leads to Kaldor-Hicks efficient outcome).
36. See, e.g., Aaron S. Edlin, Cadillac Contracts and Up-Front Payments: Efficient Investment Under Expectation Damages, 12 J.L. ECON. & ORG. 98, 98 (1996)
37. cf. Ian R. Macneil, Efficient Breach of Contract: Circles in the Sky, 68 VA. L. REV. 947, 950-53 (1982) (disputing efficiency of efficient breach).
38. Eric Posner, Economic Analysis of Contract Law After Three Decades: Success or Failure?, 112 YALE L.J. 829, 832 (2003). Of course, other interests have their adherents.
39. See, e.g., Joseph M. Perillo, Restitution in the Second Restatement of Contracts, 81 COLUM. L. REV. 37, 51 (1981) (advocating the approach taken by the Second Restatement on restitution)
40. Steven Shavell, Specific Performance Versus Damages for Breach of Contract: An Economic Analysis, 84 TEX. L. REV. 831, 847-54 (2006) (arguing that an economic analysis supports specific performance as a remedy for breach of contracts to convey property)
41. Seana Shiffrin, The Divergence of Contract and Promise, 120 HARV. L. REV. 709, 714 (2007) (elaborating a general theory of the moral commitment to perform). The underlying moral bases for evaluating contract damages are a recurring subject of contention.
42. See, e.g., Nathan B. Oman, The Failure of Economic Interpretations of the Law of Contract Damages, 64 WASH. & LEE L. REV. 829, 851-59 (2007).
43. See Melvin A. Eisenberg, Why There is No Law of Relational Contracts, 94 NW. U. L. REV. 805, 812-13 (2000) (describing the foundations of relational contract theory).
44. See id. at 817-18 (explaining the definitional problem).
45. IAN R. MACNEIL, CONTRACTS: EXCHANGE TRANSACTIONS AND RELATIONS 12 (2d ed. 1978).
46. Paul J. Gudel, Relational Contract Theory and the Concept of Exchange, 46 BUFF. L. REV. 763, 765 (1998).
47. Stewart Macaulay, Relational Contracts Floating on a Sea of Custom? Thoughts About the Ideas of Ian Macneil and Lisa Bernstein, 94 Nw. U. L. REV. 775, 775-84 (2000) (contending that the most realistic theory of the behavior of contracting parties consists of an admixture of the relational approach with cognizance that, in certain contexts, the tenets of that theory are empirically false).
48. Id. at 782.
49. IAN R. MACNEIL, THE NEW SOCIAL CONTRACT 62 (1980) (criticizing enforcement of expectancy interest as inconsistent with relational expectations).
50. Robert W. Gordon, Macaulay, Macneil, and the Discovery of Solidarity and Power in Contract Law, 1985 WIS. L. REV. 565, 569.
51. The early work on this problem is Stewart Macaulay's classic, Non-Contractual Relations in Business: A Preliminary Study, 28 AM. SOC. REV. 55 (1963).
52. Later work includes Daniel Keating, Exploring the Battle of the Forms in Action, 98 MICH. L. REV. 2678 (2000)
53. Daniel Keating, Measuring Sales Law Against Sales Practice: A Reality Check, 17 J.L. & COM. 99 (1997)
54. Russell J. Weintraub, A Survey of Contract Practice and Policy, 1992 WIS. L. REV. 1. A different set of papers examines contract terms embedded in actual agreements.
55. See, e.g., Marcel Kahan & Michael Klausner, Standardization and Innovation in Corporate Contracting (Or "The Economics of Boilerplate"), 83 VA. L. REV. 713 (1997).
56. See, e.g., Stewart Macaulay, The Real and the Paper Deal: Empirical Pictures of Relationships, Complexity and the Urge for Transparent Simple Rules, in IMPLICIT DIMENSIONS OF CONTRACT: DISCRETE, RELATIONAL AND NETWORK CONTRACTS 51, 51 (David Campbell et al. eds., 2003) ('Often, however, the paper deal will not reflect the real deal: a writing can be inconsistent with the actual expectations of the parties.").
57. Cf. Dan M. Kahan, The Secret Ambition of Deterrence, 113 HARV. L. REV. 413, 413-19 (1999) (arguing that deterrence-talk plays a similar role in criminal law).
58. Unlike Kahan's discussion of the idiom of criminal deterrence, it isn't as clear that public (as opposed to scholarly and judicial) discussions of breach revolve around prevention. Cf. id.
59. To those professors who may think that this is a farfetched possibility, we would ask you to consider how different the atmosphere of the traditional contract class is on the day that unconscionability is discussed.
60. Richard Craswell, When is a Willful Breach "Willful"? The Link Between Definitions and Damage, 107 MICH. L. REV. 1501, 1506 (2009) (internal quotations omitted). Notably, Craswell does not adopt this position, but simply notes it as a possible solution to the existence of lay preferences about contracts. Id.
61. See, e.g., Benjamin Taibleson, Note, Forgiving Breach: Understanding the Preference For Damages Over Specific Performance, 27 QUINNIPIAC L. REV. 541, 541-45 (2009) (examining the validity, bases, and usefulness of one such informed preference).
62. See William J. Woodward, Contractarians, Community, and the Tort of Interference with Contract, 80 MINN. L. REV. 1103, 1156-60 (1996) (describing "empirical vacuum" about the amount of damages that would make promisees indifferent to breach, and the resulting strength of the case for the tort of interference with contract).
63. See infra text accompanying notes 147-158.
64. See, e.g., Sandra L. Robinson & Denise M. Rousseau, Violating the Psychological Contract: Not the Exception but the Norm, 15 J. ORG. BEHAV. 245, 245, 249-52 (1994) (surveying employees about their understanding of employment contracts and their reactions to perceived breaches of their respective agreements)
65. Steven Shavell, Is Breach of Contract Immoral?, 56 EMORY L.J. 439, 439-42 (2006) (reporting the results of a survey study of moral judgments of breach)
66. Wilkinson-Ryan & Baron, supra note 2, at 412-19 (using experimental manipulations of variables like breacher motivation, timing of breach, and relationship of promisor and promisee to evaluate responses to breach).
67. See Wilkinson-Ryan & Baron, supra note 2, at 420-23 (finding that subjects' chosen damages awards for breach varied in response to framing effects).
68. Id. at 414, 420-21.
69. Id. at 417-19.
70. Id. at 419-20.
71. Id.
72. Id. at 412-13, 417-20.
73. Id. at 420.
74. Id.
75. See, e.g., Holmes, supra note 1, at 462 ("[T]he duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it-and nothing else.").
76. Wilkinson-Ryan & Baron, supra note 2, at 418-19.
77. Id. at 422.
78. Id. at 420-23.
79. Id.
80. See Daniel Markovits, Solidarity at Arm's Length 3 (Oct. 30, 2008) (unpublished manuscript), available at http://www.law.upenn.edu/academics/ institutes/ilp/2008papers/ MarkovitsSolidarityatArmsLength.pdf ('Promise-promise-making and promise-keeping-is a form of social solidarity, a way for persons to engage one another through their intentions.").
81. See Tess Wilkinson-Ryan, Moral Psychology of Contracts, in FAULT IN AMERICAN CONTRACT LAW (Omri Ben-Shahar & Ariel Porat eds.) (forthcoming Sept. 2010) (showing survey data in which respondents routinely reported that a judge would award specific performance and/or supracompensatory damages).
82. Wilkinson-Ryan & Baron, supra note 2, at 405.
83. Dennis P. Stolle & Andrew J. Slain, Standard Form Contracts and Contract Schemas: A Preliminary Investigation of the Effects of Exculpatory Clauses, 15 BEHAV. SCI. & L. 83, 91-93 (1997).
84. See MACNEIL, supra note 37, at 16-17 (discussing the obligations inherent in contractual relationships).
85. See Edward Lorenz, Trust, Contract and Economic Cooperation, 23 CAMBRIDGE J. ECON. 301, 301-304, 314-15 (1999) (finding evidence that trust enhances the social surplus in contracts).
86. See Alan P. Fiske & Nick Haslam, Social Cognition is Thinking About Relationships, CURRENT DIRECTIONS IN PSYCHOL. SCI., Oct. 1996, at 143, 143-48 (1996) (arguing that cognition about social interactions is strongly governed by the type of relationship a party believes to exist between herself and her co-party and that one's conception of the type of relationship one has with another will strongly influence the behavior towards that other).
87. See Symposium, Relational Contract Theory, 94 Nw. L. REV. 735 (2000)
88. e.g., Jay M. Feinman, Relational Contract Theory in Context, 94 Nw. L. REV. 737, 737-48 (2000) (discussing the development of relational contract theory within the broader context of the evolution of modern contract law in general).
89. See Markovits, supra note 62, at 3 (arguing that breach of contract represents an alienation of human solidarity).
90. Alan P. Fiske, The Four Elementary Forms of Sociality: Framework For a Unified Theory of Social Relations, 99 PSYCHOL. REV. 689, 706-08 (1992) (making distinctions between relationships based on market transactions as opposed to communal forms of exchange, among others).
91. See N.L. Kerr, Motivation Losses in Small Groups: A Social Dilemma Analysis, 45 J. PERSONALITY & SOC. PSYCHOL. 819, 821-23 (1983) (using small-group projects to study the effects of shirking by one participant on the effort levels of other participants).
92. Ernst Fehr & Simon Gachter, Altruistic Punishment in Humans, 415 NATURE 137, 137 (2002).
93. A schema is a mental representation of a concept.
94. Kathleen D. Vohs et al., Feeling Duped: Emotional, Motivational, and Cognitive Aspects of Being Exploited by Others, 11 REV. GEN. PSYCHOL. 127, 128-39 (2007).
95. Id. at 128.
96. See Cass Sunstein, Moral Heuristics, 28 BEHAV. & BRAIN SCI. 531, 537-38 (2005) (discussing betrayal of trust as being perceived as an independent harm).
97. Mizuho Shinada et al., False Friends are Worse than Bitter Enemies: "Altruistic" Punishment of In-Group Members, 25 EVOL. & HUM. BEHAV. 379, 388-91 (2004).
98. Iris Bohnet & Richard Zeckhauser, Trust, Risk and Betrayal, 55 J. ECON. BEHAV. & ORG. 467, 474-75 (2004).
99. The game was as follows: Players had to decide between two options, either accept a guaranteed medium reward or take a gamble that would yield either a high or a low payoff. The first player, the decisionmaker, was told to decide on a minimum acceptable probability of receiving the high payoff, such that he would prefer the gamble to the sure thing. Experimenters chose a random number from 1 to 100; that was the probability of high payoff for a given round. If the decisionmaker had chosen a higher threshold, he got the sure thing; if he had chosen a lower threshold, he got to play the gamble. This game included a second player, the recipient. If the decisionmaker got the sure thing, the recipient would receive an identical payoff. If the decisionmaker played the gamble, the recipient received more money when the decisionmaker got the low payoff and less when the decisionmaker got the high payoff. In the control condition, the recipient was passive. In the trust condition, the outcome of the gamble was determined by the recipients; the probability of success in the gamble was established by the proportion of recipients in a round who indicated that they would choose the high payoff for the decisionmaker. The average minimum probability of high payoff required by decisionmakers in the control condition was 30 percent; in the trust condition it was 50 percent. The researchers suggested that the difference was a kind of betrayal discount.
100. Id. at 472-80.
101. Daniel Kahneman et al., Fairness as a Constraint on Profit-Seeking: Entitlements in the Market, 76 AM. ECON. REV. 728, 731-32 (1986).
102. Id.
103. Id.
104. Id. at 739-40.
105. Daniel Kahneman et al., Fairness and the Assumptions of Economics, 59 J. BUS. S285, S288-89 (1986).
106. Id.
107. Id.
108. Elizabeth Hoffman et al., Preferences, Property Rights, and Anonymity in Bargaining Games, 7 GAMES & ECON. BEHAV. 346, 367-68 (1994).
109. Id. at 362.
110. Armin Falk et al., On the Nature of Fair Behavior, 41 ECON. INQUIRY 20 (2003).
111. Wilkinson-Ryan & Baron, supra note 2, at 405.
112. E.g., Robert Cooter, Prices and Sanctions, 84 COLUM. L. REV. 1523, 1544 (1985) ("If the promisor breaches and pays perfect expectation damages and nothing more, then the promisee will get none of the surplus and the promisor will get all of it.").
113. Ernst Fehr & Karl Schmidt, Theories of Fairness and Reciprocity: Evidence and Economic Applications 18-23 (Inst, for Empirical Res. in Econ., Working Paper No. 75, 2001)
114. Sally Blount, When Social Outcomes Aren't Fair: The Effect of Causal Attributions on Preferences, 63 ORG. BEHAV. & HUM. DECISION PROCESSES 131, 134 (1995).
115. Id.
116. Id. at 135, 136 fig.1.
117. Id.
118. Kerr, supra note 72, at 825.
119. Wilkinson-Ryan & Baron, supra note 2, at 417-20.
120. Subjects in all experiments in this Article were members of a panel recruited over a tenyear period, mostly through their own efforts at searching for ways to earn money by completing questionnaires. Approximately 90 percent of subjects were U.S. residents (with the rest mostly from Canada). The panel is roughly representative of the adult U.S. population in terms of income, age, and education, but not in terms of sex, because (for unknown reasons) women predominate in this respondent pool.
121. For each study, an email was sent to about five hundred members of the panel, saying how much the study paid and where to find it on the World Wide Web. Each study was a series of separate web pages, programmed in JavaScript. The first page provided brief instructions. Each of the others presented a case, until the last, which asked for (optional) comments and sometimes contained additional questions. Each case had a space for optional comments. Otherwise, the subjects had to answer all questions to proceed. The study was removed when about one hundred responses had been submitted in each case. In Experiment One, eighty-three subjects were paid $1.50 to complete a five-minute study. 73.4 percent of subjects were female. Subjects ranged in age from twenty-three to sixty-five, with a median age of forty-three.
122. The t-statistic was 3.465 with 77.42 degrees of freedom, p < 0.001.
123. The t-statistic was 1.899 with 70.26 degrees of freedom, p = 0.062.
124. We also wanted to know how each variable affected the damages responses. We regressed the damages question each of the eight variables, including a variable for subject fixed effects. Of the eight variables, the only reliable predictor of damages, holding all other variables constant, was the Sucker variable (coefficient = 188.49, t = 1.959, p = 0.054). This regression is not reported for Experiments Two and Three.
125. Subjects were paid $2 to complete a five-minute questionnaire about contracts cases. 100 subjects participated in Experiment Two, thirty-four of whom were male. Ages ranged from twenty-one to seventy with a median age of forty.
126. The t-statistic was 3.865, with 96.83 degrees of freedom, p < 0.001.
127. The mean response to the Angry variable was 6.06 in the Loss case and 7.31 in the Gain case. The t-statistic was 2.607 with 94.66 degrees of freedom, p = 0.011. The mean response to the Embarrass variable was 4.80 in the Loss condition and 5.73 in the Gain condition. The tstatistic was 2.051 with 97.48 degrees of freedom, p = 0.043. 107. Subjects were paid $6 to complete a thirty-minute questionnaire about contracts cases. 199 subjects participated in Experiment Three, 26.1 percent of whom were male. Ages ranged from twenty-four to seventy-five with a median age of forty-five. (Some items on that questionnaire are not reported here, and were used as pilot data for other research).
128. t = 2.632, df = 198, p = 0.0092. Note that this study used an entirely within-subjects design, so we are comparing a given subject's responses to the two conditions.
129. t = 1.774, df= 196.60, p = 0.078.
130. Interestingly, in both conditions, the amount demanded was greater than the expectation award. However, we used only a single set of cases, so it is unclear if subjects found both accidental and unintentional breach objectionable, or if they objected to something particular about the facts of the plumbing contract in question.
131. OLIVER WENDELL HOLMES, JR., THE COMMON LAW 7 (Mark DeWolfe Howe ed., Harvard University Press 1963) (1881).
132. See generally Jon Hanson & David Yosifon, The Situational Character: A Critical Realist Perspective on the Human Animal, 93 GEO. L.J. 1, 63-65 (2004) (explaining attribution theory in legal settings).
133. For an interesting case-study approach that analyzed the rarity of post-decision bargaining, see Ward Farns worth, Do Parties to Nuisance Cases Bargain After Judgment? A Glimpse Inside the Cathedral, 66 U. CHI. L. REV. 373 (1999).
134. See, e.g., Daniel Kahneman et al., Shared Outrage and Erratic Awards: The Psychology of Punitive Damages, 16 J. RISK & UNCERTAINTY 49, 51-53 (1998) (summarizing a theoretical model in which outrage is a driving factor in punitive impulses).
135. See Vohs et al., supra note 75, at 134 (describing anger and a possibility of retaliatory attack as likely responses to being duped).
136. See Kahan, supra note 5, at 71 ("When . . . [people] perceive that others are shirking or otherwise taking advantage of them, individuals are moved by resentment and pride to withhold their own cooperation and even to engage in personally costly forms of retaliation.")
137. See Fehr & Gachter, supra note 73, at 137-39.
138. See supra text accompanying notes 76-80.
139. Vohs et al., supra note 75, at 134 (describing anger and frustration with the self as well as shame and guilt as among the prime aversive emotions likely evoked by feeling duped).
140. Id. at 134-36.
141. ANDREW M. COLMAN, GAME THEORY AND ITS APPLICATIONS IN THE SOCIAL AND BIOLOGICAL SCIENCES 137 (2d ed. 1995) (describing a "sobering" period where participants become less willing to work together to maximize gain).
142. See, e.g., Richard A. Posner, The Law and Economics of Contract Interpretation, 83 TEX. L. REV. 1581, 1583-84 (2005) (describing the costs incurred at the time of drafting a contract).
143. Bruno S. Frey, Does Monitoring Increase Work Effort? The Rivalry with Trust and Loyalty, 31 ECON. INQUIRY 663, 665 (1993).
144. Kahan, supra note 5, at 72.
145. Lee Anne Fennell, Beyond Exit and Voice: User Participation in the Production of Local Public Goods, 80 TEX. L. REV. 1, 26-29 (2001)
146. Christopher C. Fennel & Lee Anne Fennell, Fear and Greed in Tax Policy: A Qualitative Research Agenda, 13 WASH. U. J.L. & POL'Y 75, 99-100 (2006).
147. See, e.g., Randy E. Barnett, A Consent Theory of Contract, 86 COLUM. L. REV. 269, 317 (1986) (criticizing court's refusal to enforce liquidated damages clauses on consent grounds).
148. See Shiffrin, supra note 30, at 734-35 (explaining and critiquing this argument).
149. See Tess Wilkinson-Ryan, Do Liquidated Damages Encourage Efficient Breach? A Psychological Experiment, 108 MICH. L. REV. (forthcoming Mar. 2010), available at http://papers.ssrn.com/so13/papers.cfm?abstract-id-1299817 (manuscript at 11-15) (summarizing and commenting upon various efficiency and rationality analyses of liquidated damages clauses specifically with respect to the concept of efficient breach).
150. Id.
151. Id. at 33.
152. Id. at 31-32.
153. Id. at 34-38.
154. Id. at 38.
155. This analysis depends, of course, on subsequent work on the relationship between liquidated damage clauses and pre- and post-breach behavior.
156. See, e.g., Charles L. Knapp, Reliance in the Revised Restatement: The Proliferation of Promissory Estoppel, 81 COLUM. L. REV. 52, 53 (1981) ("[PE] has become perhaps the most radical and expansive development of this century in the law of promissory liability.")
157. cf. Joel M. Ngugi, Promissory Estoppel: The Life History of an Ideal Legal Transplant, 41 U. RICH. L. REV. 425 (2007) (providing an intellectual history of the doctrine).
158. Robert A. Hillman, Questioning the "New Consensus" on Promissory Estoppel: An Empirical and Theoretical Study, 98 COLUM. L. REV. 580, 588-96 (1998) (empirically demonstrating the low win rate on PE claims).
159. See, e.g., Juliet P. Kostritsky, The Rise and Fall of Promissory Estoppel or is Promissory Estoppel Really as Unsuccessful as Scholars Say It Is: A New Look at the Data, 37 WAKE FOREST L. REV. 531, 543-85 (2002) (examining different data and finding a higher win rate).
160. Cf. Sidney W. DeLong, Placid, Clear-Seeming Words: Some Realism About the New Formalism (With Particular Reference to Promissory Estoppel), 38 SAN DIEGO L. REV. 13, 44 (2001) (arguing that, in evaluating reliance, "courts employ implicit normative standards in the guise of purely causal reasoning").
161. Studies relying on opinions to determine success rates of claims are subject to wellknown selection biases.
162. See Christina L. Boyd & David A. Hoffman, Disputing Limited Liability, 104 NW. U. L. REV.- (forthcoming 2010), available at http://papers.ssrn.com/sol3/papers.cfm? abstract-id=1483278.
163. GRANT GILMORE, THE DEATH OF CONTRACT 79 (1974).
164. The late 1970s to early 1980s were marked by boundary insecurity between other first year courses.
165. See Thomas Grey, The Disintegration of Property, in NOMOS XXII: PROPERTY 69, 71-72 (J. Roland Pennock & John W. Chapman eds., 1980) (listing different usages of the term "property," including by law students and law professors, and concluding that "discourse about property has fragmented into a set of discontinuous usages").
166. For some, that's the point. See Daniel A. Farber & John H. Matheson, Beyond Promissory Estoppel: Contract Law and the "Invisible Handshake," 52 U. CHI. L. REV. 903, 906 (1985).
167. RESTATEMENT (SECOND) OF CONTRACTS §90 (1981).
168. Cf. Hillman, supra note 135, at 601-02 (finding reliance to be a common measure of damages).
169. Cf. John J. Chung, Promissory Estoppel and the Protection of Interpersonal Trust, 56 CLEV. ST. L. REV. 37, 50-51 (2008) (discussing the differences between trust and reliance).
170. See Sidney W. DeLong, The New Requirement of Enforcement Reliance in Commercial Promissory Estoppel: Section 90 as Catch-22, 1997 WIS. L. REV. 943, 959 (noting that some courts suggest that promisees must demonstrate that they believed a promise legally enforceable in order to obtain relief under section 90).
171. See Omri Ben-Shahar & Ariel Porat, Foreword: Fault in American Contract Law, 107 MICH. L. REV. 1341, 1342-43 (2009) (summarizing participants' accounts).
172. See generally Oren Bar-Gill & Omri Ben-Shahar, An Information Theory of Willful Breach, 107 MICH. L. REV. 1479 (2009)
173. Craswell, supra note 44;
174. Steve Thel & Peter Siegelman, Willfulness Versus Expectation: A Promisor-Based Defense of Willful Breach Doctrine, 107 MICH. L. REV. 1517(2009).
175. E.g., Bar-Gill & Ben-Shahar, supra note 147, at 1494 (arguing that, where the likelihood of breach detection is lower, supracompensatory damages may be the only way to prevent inefficient breach).
176. 129 N.E. 889 (N.Y. 1921).
177. 382 P.2d 109 (Okla. 1962).
178. 129 N.E. at 890.
179. Id. at 891.
180. 382P.2dat 111.
181. Id. at 113.
182. See Craswell, supra note 44, at 1502-04. In Jacobs & Young, the contractor could have invested more care in preventing the " accidental" breach, and could have freely decided to remediate the harm without the plaintiff seeking legal intervention, while in Peevyhouse, the mining company refused to make the promised repairs because it decided they would cost too much.
183. Thel & Siegelman, supra note 147, at 1527.
184. Craswell, supra note 44, at 1506.
185. See Shiffrin, supra note 30, at 740-49.
186. Wilkinson-Ryan & Baron, supra note 2, at 405.
187. See Macaulay, supra note 35, at 778 ("In a [long-term] relational contract, often it is hard to say when the contract is formed. Moreover, it is not likely to be formed once and for all. Rather than a scene frozen in a still photograph, a relational contract is more like an ongoing motion picture.").
188. See Vohs et al., supra note 75, at 132 ("[P]eople are reluctant to admit having been duped (because they blame themselves). . . .").
189. Id. at 127.