Breach is for Suckers

43 Pages Posted: 15 Aug 2009 Last revised: 22 Aug 2010

Tess Wilkinson‐Ryan

University of Pennsylvania Law School

David A. Hoffman

University of Pennsylvania Law School; Cultural Cognition Project at Yale Law School

Abstract

This paper presents results from three experiments offering evidence that parties see breach of contract as a form of exploitation, making disappointed promisees into “suckers.” In psychology, being a sucker turns on a three-part definition: betrayal, inequity, and intention. We used web-based questionnaires to test the effect of each of the three factors separately. Our results support the hypothesis that when breach of contract cues an exploitation schema, people become angry, offended, and inclined to retaliate even when retaliation is costly. This theory offers a useful advance insofar it explains why victims of breach demand more than similarly situated tort victims and why breaches to engorge gain are perceived to be more immoral than breaches to avoid loss. In general, the sucker theory provides an explanatory framework for recent experimental work showing that individuals view breach as a moral harm. We describe the implications of this theory for doctrinal problems like liquidated damages, willful breach, and promissory estoppel, and we suggest an agenda for further research.

Keywords: contracts, breach, expectation, sucker, exploitation, reciprocity, promissory estoppel, willful breach, liquidated damages

JEL Classification: K00, C91, K12

Suggested Citation

Wilkinson‐Ryan, Tess and Hoffman, David A., Breach is for Suckers. Vanderbilt Law Review, Vol. 63, p. 1003, 2010; Temple University Legal Studies Research Paper No. 2009-33. Available at SSRN: https://ssrn.com/abstract=1451123

Tess Wilkinson-Ryan

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

David A. Hoffman (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

Cultural Cognition Project at Yale Law School

127 Wall St
New Haven, CT 06520
United States

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