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The law and economics scholars are inspired by Holmes. For example, Posner notes that: "When a breach of contract is established, the issue becomes one the proper remedy. A starting point for analysis is Holmes's view that is not the policy of the law to compel adherence to contracts but only to require each party to choose between performing in accordance with the contract and compensating the other party for any injury resulting from a failure to perform. This view contains an important economic insight." (Economic Analysis of Law, Boston-Toronto, 1977, p. 88).
In accordance with the above reasoning, Cooter and Ulen, in turn, state: "We define an efficient breach as follows: a breach of contract is more efficient than performance of the contract when the costs of performance exceed the benefits to all the parties".
"In summary, breach is efficient when, as a result of a windfall or an accident, the resources needed for performance are more valuable in an alternative use. Incentives for breach are efficient when the transfer of resources to the highest-valued use is accomplished at the lowest transaction costs and in such a way that no one is made worse off by the transfer and at least one person is made better off." (Law and Economics, 1988, p. 290-291).
Therefore, the same damages raise issues with respect to the circulation of the relevant economic models: it is even possible to agree with Posner, Cooter, Ulen and all the scholars who analyzed the above issues; however, in the civil law experience, such models remain abstract and inapplicable arguments.
Even with regard to the assessment of damages, the common law and civil law systems provide for different options. We have outlined above the analogous solutions provided for with reference to the recovery of any loss suffered by the injured party and the loss of gains.
However, these general principles imply two different methods of assessment. The most common method consists in considering the injured party in the position in which same party would have been, if the agreement had been properly fulfilled (so-called Diferenztheorie: see, par. 249 of B.G.B., pursuant to which "a person who is obliged to make compensation shall restore the situation which would have existed if the circumstance rendering him liable to make compensation had not occurred"). This theory is adopted in France and in Italy, as an addition to the text of the Codes (see, respectively, art. 1149 and art. 1223), which generally make reference to the loss suffered by the injured party and the loss of gains.
Even common law systems adopt the above indicated method, which is known as recovery of damage consisting in the so-called expectation interests. In English law, without further case-by-case explanations on the application of the rule, it is possible to select categories of damages analogous to those pertaining to the civil law experience (see, for example, Treitel, The Law of Contract, London, 1991, p. 824 and following); the same conclusion is applicable with reference to the U.S. law system (see, for example, Farnsworth, cited above, p. 839 and following).
However, a second method (the so-called reliance interests), which is based on the recovery of damages considering the position which the injured party would have had if same had never enter into the agreement, has been adopted for some decades.
The above method is not permitted in the civil law systems. In Italy, such a method is applied only with respect to the negotiations (so-called "pre-contractual liability"), when either of the parties has withdrawn from the negotiations without a valid reason, or has caused a ground of invalidity of the agreement to be entered into.
Therefore, the whole argument concerning the reliance interests is not applicable to the civil law systems.
The Unidroit Principles, in order not to limit the options of the judges/arbitrators, have not taken any position in point: the harm "includes both any loss which [the injured party] suffered and any gain of which it was deprived" (art. 7.4.2).
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