A Note on the Equivalence between Contractual and Tort Liability Rules

Universidad del CEMA Trabajo Paper No. 179

18 Pages Posted: 9 Nov 2001

Date Written: December 2000

Abstract

The aim of this paper is to conciliate some conclusions of the economic theories of breach of contract and tort law. The main result is that the two efficient alternatives that tort law identifies (negligence rule and strict liability with a defense of contributory negligence) are mirrored by two efficient ways of defining contract damages. The first consists of forcing the debtor to pay expectation damages but limiting the level of the creditor's reliance (rule of damage mitigation). The second consists of obliging the debtor to pay expectation damages only when his breach of contract implies negligence, otherwise using restitution remedies (doctrines of impracticability and force majeure).

Keywords: Contract law, tort law, liability rules.

JEL Classification: K12, K13

Suggested Citation

Coloma, German and Pernice, Sergio, A Note on the Equivalence between Contractual and Tort Liability Rules (December 2000). Universidad del CEMA Trabajo Paper No. 179, Available at SSRN: https://ssrn.com/abstract=289807 or http://dx.doi.org/10.2139/ssrn.289807

German Coloma (Contact Author)

University of CEMA ( email )

Department of Economics Cordoba 374 - Piso 7
1054 Buenos Aires
Argentina
+54 11 4314-2269 (Phone)
+54 11 4314-1654 (Fax)

Sergio Pernice

University of CEMA ( email )

Department of Finance Cordoba 637 - Piso 3
1054 Buenos Aires
Argentina
4314-1304 (Phone)
4314-1654 (Fax)

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