Last time I posted a bit about Michael Knobler's note on contract remedies here. The disconnect between contract as an option (to perform or pay compensation) and the widespread belief that breach is a wrong that at least sometimes should be remedied by something more than compensation creates a problem. Contract law rests on the presupposition of party consent; but what are we to do if many (most?) parties don't consent to the option theory? Two less-than-satisfactory alternatives are to do nothing or to educate non-lawyers about the law. Is there anything more positive? Knobler thinks so.
He suggests that the law analyze contracts at two levels, first, as a breach of the primary obligation compensable under the current rules. Second, as a breach of what Knobler calls a "meta contract," which represents the value of the promise itself, not merely the loss caused by breach. How can such an abstract concept be valued? Either by giving the aggrieved promisee the power to demand specific performance or by "legislatively created guidelines similar to sentencing guidelines." The goal would be to monetize "the disutility associated with the mental adjustment of receiving something other than the contracted-for performance." The need for statutory guidelines is immediately apparent. And what of repeat players in the world of contracts, those who contract for value and would prefer a lower price to the potential to recover damage for breach of the "meta contract?" They could, under Knobler's system, opt back to the current state of the law in their contract.
A bifurcated system of contract law is not as bizarre as it might seem. After all, already there are distinct merchant and non-merchant rules in Article 2 of the UCC and Knobler suggests making the dual system of recovery mandatory for non-merchant promisees.
Knobler's analysis is more insightful than his suggestions likely to become law. Yet, the reconsideration of contract remedies is always a worthwhile endeavor.
He suggests that the law analyze contracts at two levels, first, as a breach of the primary obligation compensable under the current rules. Second, as a breach of what Knobler calls a "meta contract," which represents the value of the promise itself, not merely the loss caused by breach. How can such an abstract concept be valued? Either by giving the aggrieved promisee the power to demand specific performance or by "legislatively created guidelines similar to sentencing guidelines." The goal would be to monetize "the disutility associated with the mental adjustment of receiving something other than the contracted-for performance." The need for statutory guidelines is immediately apparent. And what of repeat players in the world of contracts, those who contract for value and would prefer a lower price to the potential to recover damage for breach of the "meta contract?" They could, under Knobler's system, opt back to the current state of the law in their contract.
A bifurcated system of contract law is not as bizarre as it might seem. After all, already there are distinct merchant and non-merchant rules in Article 2 of the UCC and Knobler suggests making the dual system of recovery mandatory for non-merchant promisees.
Knobler's analysis is more insightful than his suggestions likely to become law. Yet, the reconsideration of contract remedies is always a worthwhile endeavor.
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