English Contract Law and the Efficient Breach Theory: Can They Co-Exist?

Abstract

The ‘efficient breach’ theory holds that remedial orders, namely specific performance, compensatory damages and restitutionary damages for wrongs, should be designed in such a way as to maximize the production of efficient outcomes. For lawyer-economists, the goal of creating rules of law is to maximize the achievement of a particular outcome, that is, economic efficiency. This paper seeks to identify the major problems of adopting the efficient breach theory in English contract law. It also aims to explain and justify the existing scheme of remedies for breach of contract in the English contract law on (non efficiency-based) normative grounds.

Keywords: Efficient breach theory, Economic efficiency, English Contract Law, breach of contract