Disgorgement of Profits for Breach of Contract: A Comparative Analysis

Abstract:     
This article considers whether a contract-breaker is obliged not only to pay compensatory damages but also to disgorge to the innocent party the profits obtained from breach of contract. After an introduction to the topic (Part A), Part B outlines the approach of the courts in Common Law jurisdictions. The main focus is on English Law and the decision of the House of Lords in Attorney General v Blake, although judgments from other countries are also mentioned. Part C focuses upon Germany as an example of a Civil Law jurisdiction. The German law of contract, negotiorum gestio and unjustified enrichment is examined as to their ability to award disgorgement. In Part D the mixed legal systems of Israel, Louisiana and Scotland are studied. Part E compares and interprets the similarities and differences between the different legal systems. In particular, the article considers common starting points, exceptions and new legal concepts, as well as differences in judicial decision-making and in the freedom to draft contractual terms. Finally, in Part F, it is contended that disgorgement of the benefits resulting from a breach of contract should in principle be awarded. Moreover, this should not be restricted to certain cases. It is necessary only that the gains should be attributable to breach of contract.

Number of Pages in PDF File: 39

Keywords: Contract law, comparative law, breach of contract, negotiorium gestio, unjustified enrichment, disgorgement of profits, account of profits, resitutionary damages, efficient breach

JEL Classification: K00, K12

Accepted Paper Series