Victor Goldberg, ‘Reckoning Contract Damages: Valuation of the Contract as an Asset’

When a contract is breached the law typically provides some version of the aphorism that the non-breaching party should be made whole. The Uniform Commercial Code (UCC) provides that ‘[t]he remedies provided by this Act shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed’. The English version, going back to Robinson v Harman, is ‘that where a party sustains a loss by reason of breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed’. Similarly, under Article 74 of the United Nations Convention on Contracts for the International Sale of Goods (CISG), ‘damages are based on the principle that damages should provide the injured party with the benefit of the bargain, including expectation and reliance damages’. International arbitrations often cite the so-called Chorzów Factory rule: ‘reparation must, as far as possible, wipe out all the consequences of the illegal act and reestablish the situation which would, in all probability, have existed if that act had not been committed’. However, application of the aphorism has proven more problematic. In this paper, I propose a general principle that should guide application – the contract is an asset and the problem is one of valuation of that asset at the time of the breach …

Victor P Goldberg, Reckoning Contract Damages: Valuation of the Contract as an Asset, 75 Washington and Lee Law Review 301 (2018).

First posted 2018-04-29 07:43:46

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