Is the Law of Contract Seriously Defective If the Court Is Unable to Award Restitutionary Damages for Breach of Contract?/EST-CE QUE LE DROIT DES CONTRATS EST DÉFECTUEUX SI LE TRIBUNAL EST DANS L'IMPOSSIBILITÉ D'ACCORDER LA RESTITUTION DES DOMMAGES ET INTÉRÊTS POUR LA RUPTURE DE CONTRAT?

By Xia, Zheng | Canadian Social Science, July 1, 2009 | Go to article overview

Is the Law of Contract Seriously Defective If the Court Is Unable to Award Restitutionary Damages for Breach of Contract?/EST-CE QUE LE DROIT DES CONTRATS EST DÉFECTUEUX SI LE TRIBUNAL EST DANS L'IMPOSSIBILITÉ D'ACCORDER LA RESTITUTION DES DOMMAGES ET INTÉRÊTS POUR LA RUPTURE DE CONTRAT?


Xia, Zheng, Canadian Social Science


Abstract:

It is commonly believed that the general rule is that damages for breach of contract are compensatory not restitutionary.2 So, the damages are measured by the loss to the plaintiff not by the gain to the defendant.3 However, there are many academic writings which have advocated that restitutionary damages should be available as general default rule in breach of contract, because it is able to provide adequate remedy to plaintiff when compensatory damages are inadequate. The A-G vs. Blake4 is the remarkable case which embodied by Hendrix5 case, posits the general restitutionary remedy. Blake has challenged the traditional approach of damages and signaled a trend of establishing restitutionary damages. The proponents of this point always purport 'the interests of justice' for plaintiff,6 however, they misunderstand the purpose of law of contract which is to balance the interests between claimant and defendant so that to maximize the social profits.7 Accordingly, the restitutionary damages are an objection to efficient breach in economic view because the restitution and account of profit (disgorgement) will deprive the defendant's incentive to maximize profits and the claimant's desire to minimize loss. So, the virtue of damages for breach of contract would be diminished if the general restitution relief is established.

Key words: Restitutionary damages; Compensatory damages; Freedom of contract' Efficient breach

Résumé: Il est indéniable que pour la rupture de contrat, on applique en général l'indemnisation des dommages et intérêts plutôt que la restitution des dommages et intérêts. Ainsi, les dommages sont évalués par la perte pour la partie demanderesse plutôt que par le gain de la partie défenderesse. Toutefois, certaines thèses ont plaidé pour que la restitution des dommages et intérêts soit appliquée en tant que la règle générale, car elle peut fournir une compensation adéquate au demandeur lorsque des l'indemnisation des dommages et intérêts ne sont pas suffisantes. Le cas de IAG contre Blake a imposé la restitution des dommages et intérêts en tant que la règle de secours pour la rupture de contrat.Le cas de Blake a contesté l'approche traditionnelle de dommages et intérêts et a montré une tendance de l'établissement de la règle de la restitution des dommages et intérêts. Les partisans de ce point prétend protéger «l'intérêt de la justice» pour le demandeur, toutefois, ils se méprennent sur l'objectif du droit des contrats qui est d'équilibrer les intérêts entre le demandeur et le défendeur de façon à maximiser les bénéfices sociaux. Par conséquent, la restitution des dommages et intérêts est une objection à l'efficacité de la violation du point de vue économique, parce que la restitution des dommages et intérêts et le renoncement à tous les profits (les remboursements)après la rupture priveront le défendeur de l'incitation à maximiser les profits et le demandeur de la volonté de minimiser les pertes. Ainsi, l'objectif de l'indemnisation des dommages et intérêts pour rupture de contrat serait distordu si le système de la restitution des dommages et intérêts est établi.

Mots-Clés: la restitution des dommages et interest; l'indemnisation des dommages et intérêts; la règle de secours pour la rupture de contrat; la liberté du contrat

1. INTRODUCTION

In common law, the general rule is that damages for breach of contract are compensatory not restitutionary. So, the damages are measured by the loss to the plaintiff not by the gain to the defendant. However, there are academic writings advocated that restitutionary damages should be available as general default rule, because it is able to provide adequate remedy to plaintiff when compensatory damages are inadequate. The A-G vs. Blake is the remarkable case posits the general restitutionary remedy. Blake has challenged the traditional approach of damages and signaled a trend of establishing restitutionary damages. The proponents of this purport 'the interests of justice' for plaintiff, however, they misunderstand the purpose of law of contract which is to maximize the social profits. …

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Is the Law of Contract Seriously Defective If the Court Is Unable to Award Restitutionary Damages for Breach of Contract?/EST-CE QUE LE DROIT DES CONTRATS EST DÉFECTUEUX SI LE TRIBUNAL EST DANS L'IMPOSSIBILITÉ D'ACCORDER LA RESTITUTION DES DOMMAGES ET INTÉRÊTS POUR LA RUPTURE DE CONTRAT?
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