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date: 05 December 2020

Abstract and Keywords

Chapter 2 considers the debate over efficient breach theory. It suggests that the dispute between the supporters and critics of efficient breach theory rests on a false premise: efficient breaches exist. Rather, if contract terms are efficient, then breaches cannot be because a breach is the failure to comply with a contract term. Courts suppose that sophisticated parties write efficient terms so the relevant question is interpretive: what contract did the parties write? Thus, if the contract required the promisor to trade a specified item (Contract A), then the failure to deliver the item would be a breach; but if the contract required the promisor either to trade the item or to transfer to the promisee his expectation (Contract B), then the failure to trade the item would not be a breach. But the failure either to trade or to transfer would be. And neither breach would be efficient.

Keywords: efficient breach theory, expectation remedy, breach of contract, contract law

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