Turning Facts into Legal Guidelines and Reducing Judicial Uncertainty thru Methodological Innovations: Application to Contract Damages
48 Pages Posted: 27 May 2019
Date Written: January 31, 2019
From the perspective of both plaintiffs and defendants, the measurement of the damages quantum is obviously of the utmost importance. Therefore, it is surprising to see this process left entirely to the court’s discretion — especially since the quantum is traditionally considered a factual question. The result is that each litigation becomes a unique case calling for a sui generis outcome.
This article shows the limits of that approach. It leads to a structural uncertainty that is detrimental to the legitimate expectations of both parties. In practice, it deeply corrupts the fundamental principle of full recovery. I would argue there exist ways to move towards a model in which the valuation of damages will be a question of law that follows rules and methods whose application will be reviewable. In this article, I begin to explore some of these ways, specifically with respect to damages for breach of contract, using two simultaneous methodologies. The first is a comparison between French civil law, American common law and international commercial law, and the second is an empirical study involving both qualitative interviews with practitioners and the quantitative analysis of a proprietary sample of cases in which damages are difficult to measure. The article concludes with recommendations for judicial practices and a discussion of the possibility of predictive justice through shared compensatory damages schedules, which could eventually lead to artificial intelligence models.
Keywords: Breach of contract, full recovery, compensatory damages, economic loss, lost profits, quantum, expert witness, comparative law, empirical legal studies, common law, civil law, international commercial law, arbitration, reliance interest, expectation interest, consequential damages
JEL Classification: D22, D74, D82, D84, G32, G34, G38, F23, F61, K12, K15, K22, K33, K41, M13
Suggested Citation: Suggested Citation