The Economic Analysis of Remedies for Breach of Contract and Contract Interests Classification-Based on American Legal Theories and Cases
Date Issued
2008
Date
2008
Author(s)
Chuang, Han-wen
Abstract
In this thesis, I try to analyze our legal system from economic perspective. Therefore, the first step is to clarify the meaning and the function of economic analysis of law. This thesis intends to find out the common points in the law and economics. I focus on the analysis of contract law, comparing to other legal categories, is an important part of civil law and has a closer relationship with economic events. Therefore, analyzing the contract law in economic perspective can make the advantages of economic analysis more clear. First of all, this thesis will introduce how economist analyze the issues in law, and how these methods work in contract law. I will focus on the two core concepts of the law and economics –“justice” and “efficiency”, and tries to figure out the balance point between these two values. Through the foregoing analysis, this thesis wants to justify the necessity of the economic analysis in contract law. Secondly, this thesis will analyze the issue of “the remedies for breach of contract” by viewing all the remedies in common law from the economic perspective. I further discuss the incentives for performance which remedies can provide for parties to a contract. Different remedies can provide a variety of different incentives for the parties to a contract, and I consider the most important function of the remedies is to provide efficient incentives. In addition, this thesis will introduce Fuller and Perdue’s“contract interests classification”. In 1936, Lon Fuller and William Perdue published an article “The Reliance Interest in Contract Damages” in the Yale Law Journal. In the history of contract law, and of American legal thought in general, this article stands as a towering classic. It changed forever the way we think about monetary remedies for breach of contract. In particular, most analysis of monetary remedies still begins with Fuller and Perdue’s distinction between the expectation, reliance, and restitution interests. By using normative and descriptive analysis, this thesis wants to show that Fuller and Perdue’s classification is not a convenient way of classifying contract interests. It neither fits well with the economic analysis about the appropriate remedies for breach nor usefully describe the amounts that courts award. In particular, this thesis wants to emphasize that modern economics does not support how Fuller and Perdue classify the remedies. Furthermore, the most fundamental point is that economics does not even approach the question in the same way that Fuller and Perdue did, for economics does not begin by asking what “interest” the law should protect. From an instrumental perspective, the focus of economics is entirely on the effect one wants to produce, not on the “interest” one wants to protect. In conclusion, based on the foregoing argument, I will analyze Taiwanese cases and statutes, and further propose my suggestions.
Subjects
Efficiency
Remedies for Breach of Contract
Incentive
Damages
Expectation Interests
Reliance Interests
Type
thesis
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