Biological Aspects of Contract Breach
Open University of the Netherlands; CIS Law
October 12, 2012
Cooperation is an occurrence, which can be observed amongst humans and other organisms and is often viewed as an essential tool for survival, because when individuals cooperate, overall risks are reduced and mutual benefits are maximised. To sustain large groups of unrelated people, cooperation and reciprocity are a necessity. Free riding may undermine cooperation. To counterbalance the individual urge to free ride and the competing group interest, during evolution humans (and apes), developed morals. However, within large groups of unrelated people, unexpressed morals do not suffice. Rules have to be communicated to improve cooperation. From this point of view, the law is a vehicle that helps people to act as if their society is a small and cohesive group. The area of law, which is quintessentially underpinned by cooperation and reciprocity, is contract law, aptly described as the law of obligations. This body of law binds and enforces agreements between parties to ensure that individual interests are protected and mutual benefits are enhanced. The way in which the law enforces these agreements and remedies for breaches of contract is through incentives and disincentives, which are often referred to in biological texts as control mechanisms. Clearly, biology offers a number of helpful insights to this area of law and may account for why contractual remedies are structured the way they are. As contracts enhance cooperation and cooperation improves safety and availability of resources, which will in turn serve survival, reproduction and thus also the spreading of genes, contracts serve cooperation. Therefore, if a contract is breached by a party to pursue a greater individual benefit, detriment to the innocent party will result. As biological game theory tells us, the genes of the latter individual will then have lesser chances to spread if the damage is not compensated. This article surveys contractual remedies utilising a biological lens, especially efficient breaches, i.e. situations where there is an incentive to breach, which will effectively make breaching the contract more worthwhile than performing it. This method will assist us in understanding and checking human behaviour in a manner conducive to maximising societal gains.
Number of Pages in PDF File: 13
Keywords: contract breach, efficient breach, cooperation, reproduction, biological theory, Law of Obligationsworking papers series
Date posted: October 14, 2012
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