Reliance and Contract Breach

Remedies for Breach of Contract: Expectation, Reliance, Restitution, Disgorgement, and Restoration of the Contractual Equivalence

II. Legal Doctrines A. Restoration of the Equivalence Broken by Partial or Defective Performance 1. Damages for Vendor’s Breach in Land Sales and Price Abatement Ancillary to Specific Performance 2. Rent Abatement for Breach of Warranty of Habitability and other Obligations 3. Price Reduction under the CISG 4. Monetary Restitution for Non-Monetary Performance in Divisible Contracts B. Restorati...

An experimental comparison of reliance levels under alternative breach remedies

Breach remedies serve an important role in protecting relationship-specific investments. The theoretical literature predicts that some commonly used types of breach remedies may protect too well, in the sense that they induce overinvestment. The driving forces behind this result are the complete insurance against potential separation that breach remedies may provide, and the possibility to prev...

Contractual Performance, Corrective Justice, and Disgorgement for Breach of Contract

This paper is about the remedy of disgorgement for breach of contract. In it I argue for two conclusions. I first argue that, prima facie at least, disgorgement damages for breach of contract present something of a puzzle. But second, I argue that if we pay close attention to the notion of contractual performance, this puzzle can be resolved in a way that is consistent with principles of correc...

Modeling breach of contract risk through bundled options

In this paper, in order to model breach of contract risk, we design and value a bundled option that is composed of contract abandonment and price renegotiation. We show numerically that the bundled option is more valuable for the contract than either of the options, ie, contract abandonment and price renegotiation, in isolation. This value increases monotonically as the spot price becomes more ...

Working Paper Department of Economics Breach of Contract, I