Expectation damages as enforced in practice fail to deter breach.

Evidence

If commercial transactions in the industry were governed solely by explicit, legally enforceable contracts under which the promisee could recover expectation damages in the event of breach, the market would be characterized by frequent inefficient breach of contract. The sources of this inefficiency are the uncertainty of recovery, the way courts calculate damages, the length of time it takes to obtain a judgment, and, in some instances, the fact that many diamantaires do not have ready access to capital markets. In most settings, expectation damages, as enforced through the courts, do not achieve their stated theoretical objective of placing the promisee in the same position that he would have been in if the breach had never occurred; they neither make the promisee whole ex post, nor give the promisor sufficient incentive to perform the promise ex ante. — Lisa Bernestein, Opting out of the Legal System, 148

Categorization

• DEEPTHINKING: Challenges the doctrinal foundation of contract law’s flagship remedy: even in theory-touted terms, expectation damages don’t deliver their stated objective once real-world enforcement is considered.
• SEED: Could anchor an article on why legal remedies structurally under-deliver and what private ordering substitutes for them.
• XREF: connects to: Legal damages fail to compensate lost profit because intervening business value is inherently speculative. — Lisa Bernestein, Opting out of the Legal System, 151; Private arbitration can impose punitive damages to deter breach where courts cannot.; Courts sometimes reach wrong outcomes to avoid bad future rules — Frederick Schauer, Thinking Like a Lawyer, 548 (+5 more)

Related

• Judicially enforced expectation damages fail to make promisees whole or deter breach. (similarity 0.90)
• Liquidated damages clauses fail when post-contract reliance makes harm unpredictable. (similarity 0.88)
• Ex post consequential harm makes liquidated damages clauses hard to enforce in diamond deals. (similarity 0.87)
• Legal damages fail to compensate lost profit because intervening business value is inherently speculative. (similarity 0.83)

Broader Connections

• Legal damages fail to compensate lost profit because intervening business value is inherently speculative. #corroborates (0.82) — Lisa Bernestein, Opting out of the Legal System, 151
• Ex post consequential harm makes liquidated damages clauses hard to enforce in diamond deals. #exemplifies (0.80) — Lisa Bernestein, Opting out of the Legal System, 160
• Private arbitration can impose punitive damages to deter breach where courts cannot. #complicates (0.78)
• Courts sometimes reach wrong outcomes to avoid bad future rules #qualifies (0.75) — Frederick Schauer, Thinking Like a Lawyer, 548
• Stated precedent rules often fail to determine later case outcomes #corroborates (0.72) — Burton, Steven J, An Introduction to Law and Legal…, 216