What is a contract? Is it a mutual commitment to perform, or is it merely a promise to deliver the agreed-upon performance or pay damages, with each choice treated as equally acceptable? Most people answer those questions differently than the law does. People overwhelmingly view breach as immoral, favor specific performance if breach occurs, and consider exclusively economic damages undercompensatory. In contrast, courts typically treat breach as a rational option and deny nonbreaching parties specific performance and both nonpecuniary and punitive damages. The courts’ approach seems targeted to the needs of businesses rather than individuals.
This disconnect between most people’s beliefs and court enforcement undermines a foundational claim of contract law, that parties consent to a set of rules to guide their conduct and that courts enforce the parties’ will. Contract law zealously protects this consent principle in other areas, such as the statute of frauds, the doctrine of unconscionability, and the requirement for objective manifestations of intent. It seems incongruous, therefore, to frustrate consent when choosing remedies for breach.
This Note does not choose sides in the decades-old value versus performance dispute. Instead, it suggests a both-and answer for a question to which others have given an either-or response. Rather than saying that all contracts are mutual commitments to perform, or that all contracts are merely promises to deliver the agreed-upon performance or pay damages, why not recognize that the idea of “contract” embraces both definitions? Some contracts fit in one category, some in the other. Just as the Uniform Commercial Code (UCC) sets forth different rules for contracts among merchants and for those among other parties, so contract law in general should—and perhaps does—recognize the differing expectations and understandings of different contractors. If business people typically contract for value and consumers typically contract for performance, the law should be tailored to reflect that difference. I suggest two systems of remedies: a performance-oriented one for contracts to which at least one individual is a party and an option-oriented one for contracts involving only businesses.
The author is a third-year student at the Yale Law School.
