Rethinking Contract Remedies

This Article offers a theoretical framework for thinking about contract remedies. The argument starts from the distinction between rights and remedies in contract law. The distinction is consistent with the doctrinal structure of contract law in Western legal systems, and with the available empirical evidence regarding contractual parties’ expectations. Because they tend to downplay this distinction, recent theoretical analyses of the American law of contract remedies, such as Shiffrin’s analysis of the divergence between contract and promise, and Markovits and Schwartz’s defense of expectation damages, go astray. An adequate theory of contract remedies must start by taking the distinctiveness of remedies seriously. The theory offered here argues that the function of contract remedies consists of two central roles: they protect the integrity of the practice of contracting and the individuals who engage in it. Because of these considerations, there is a pro tanto reason for a certain resemblance or proportionality between remedies and the primary contractual rights they enforce. But this reason is only one of the relevant considerations in the design and evaluation of contract remedies. Once we bear in mind the distinction between rights and remedies, remedial analysis can also incorporate other morally relevant considerations beyond the central function of remedies. In order to show this, this Article offers a defense of money damages which incorporates those additional considerations. The Article, thus, offers an integrated framework for remedial analysis, and therefore for illuminating some of the debates that have perplexed contract theorists writing about contract remedies