Contract Theory and Gain-Based Recovery: A Review of Katy Barnett, Accounting for Profit for Breach of Contract: Theory and Practice

Abstract

In Accounting for Profit for Breach of Contract: Theory and Practice, Dr Barnett attempts to explore systematically the circumstances in which such gain-based relief for breach of contract both is and should be available. Rather than focussing on the book’s strengths, this article seeks to examine two important theoretical questions raised by her account. The first concerns its theoretical foundations. Not only does Barnett invoke a highly contestable theory of contractual rights that does not meaningfully advance her argument, she also fails to explain whether the various normative considerations invoked to support her theory are mutually compatible, and therefore whether her account satisfies her self-imposed criterion of ‘coherence’. A second, related, question Barnett’s account raises is whether disgorgement for contractual breach is ever justifiable. Like others, Barnett claims that profit-stripping for breach of contract is justified by considerations of ‘deterrence’ and ‘retribution’. But this common view is often too quickly assumed because there are good reasons to doubt whether these two rationales, either separately or in combination, are capable of justifying disgorgement as a response to contractual breach.

Keywords: disgorgement, contract theory, coherence, deterrence, retribution, desert