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2. The different approaches.

The first diverting approach, the economic consequences of which cannot be addressed herein, refers to the criteria for the imputation of damages.

In French, German and Italian law systems, the imputability of contractual damages is based on negligence, whereas in common law systems the negligence of a breaching party is neutral. Even in the continental experience, the application of strict liability rules has been promoted (see, for example, P. Trimarchi, Sul significato economico dei criteri di responsabilità contrattuale, published in Alpa, Pulitini, Rodotà, Romani, Interpretazione giuridica ed analisi economica, Milan, 1992, p. 283 and following). However, the case-law is currently favorable to find the liability and, therefore, to award the recovery of damages only if the breach of contract is caused at least by negligence.

The second, and more relevant for our purposes, different position pertains to the so-called "voluntary breach". The contracting party has no choice between performance and breach of contract: same party must, in any case, fulfill the obligation, except in case the breach is caused by force majeure, upcoming impossibility, unbearable upcoming material disadvantage, that is by causes independent from the party's willingness, interests, or business organization.

The voluntary breach, under the continental law systems, is negatively considered by the legislators: under the Italian Civil Code, art. 1225 provides that "if the breach or the delay does not depend on debtor's fraud, the recovery is limited to the damage which could be foreseen at the moment in which the obligation has been undertaken"; this is an ancient rule, which was already included in the French Code Napoleon (see, art. 1150: "Le debiteur n'est tenu que des dommages et interets qui ont été prevus ou qu'on a pu prevoir lors du contrat, lorsque ce n'est point par son dol que l'obligation n'est point executée").

There are several reasons for such approach: (i) first of all, the need to confirm

the binding effect of the agreement; if the debtor could be in breach being subject to the sole recovery of damages, and same may obtain an advantage by performing the obligation undertaken in favor of a third party, there would not be any certainty in the contractual relationships: anyone, who has carried out a transaction and, therefore, has entered into an agreement, would not have the certainty of the effectiveness of the transaction and, therefore, of the obligation, since he would always be subject to a possible breach of the other contracting party; the breach of contract is considered as an exceptional event, connected with events not influenced by the expectactions of the party who is in breach; (ii) secondly, from a general point of view, the need to ensure a correct performance of the trade transactions; the operators, being subject to the risk of potential breaches of contract, could be induced not to enter into any trade transaction lacking a certain degree of certainty; (iii) the need to moralize the market, in which good faith and fair dealing are the standards to which the operators should conform; (iv) the need to reduce the costs of the transactions, since the parties, foreseeing potential mutual breaches, can either contractually provide for the possible relevant remedies (such as penalty clause, termination, etc.), or obtain bank guarantees or insurance policies, etc.; all the above being useful, but expensive remedies; (v) the specific performance is deemed not as a residual remedy, but as a natural remedy.

On the contrary, in common law systems, the Holmes' statement: "The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it - and nothing else" (The Path of the Law, 1897, Harv. L. Rev., p. 462) is fundamental.

English and North-American scholars and case-law are consistent in holding that the voluntary breach of contract is not to be sanctioned with remedies different from those typically provided under contractual structures.

In English common law, Collins, in a comment to Holmes, notes that "although this dictum exaggerates the extent to which orders for compulsory performance are

excluded from actions for breach of contract, it does indicate how damages are quite frequently the sole option for the injured party. The question to be addressed here is how of damage is calculated" (The Law of Contract, London, 1993, p. 372); and, in North-American common law, Farnsworth states that "the skeptical reader may well ask whether persons of judical temperament are immune from the temptation to depart from a rule oblivious to blame, and some exceptions to the rule will be suggested in the pages that follow. Nevertheless, contract law is, in its essential design, a law of strict liability, and the accompanying system of remedies operates without regard to fault" (Contracts, Boston-Toronto, 1982, p. 842).

The reasons for this disregard to voluntary breach are several: (i) in common law the breach of contract is not generated by, and is not connected to negligence of the breaching party; (ii) in common law a factual approach prevails on a moralistic approach to the matter: any transaction implies certain risks, and whoever penetrates a market and operates on it must bear the risk of other parties' breaches; moreover, if he allocates his products or services to different parties for more convenient prices, he is in breach and fulfill the obligations undertaken with third parties; (iii) the same market rules request a better allocation of the resources and, therefore, the sanction imposed on the breaching party is represented only by the contractual remedies pursuant to the principle of the "efficient breach"; (iv) the party who is not prepared to run the above risks, may take advantage by entering into ad hoc clauses (such as a penalty clause, etc.) with the other contracting party.

Therefore, from a law and economics viewpoint, the above position is the starting point for further developments.

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