In this paper we consider situations in which the parties are in disagreement about the allocation of a certain risk, and either party could have acted ex-ante to prevent breach, to lower its probability or to insure against it (“least-cost avoidance” in tort law), but neither did so. When...

Among default remedies for breach of contract, expectation damages are believed superior to property rules such as specific performance since they allow the promisor to breach inefficient contracts when renegotiation is economically infeasible. We examine whether the promisor's ability to...