Duality in Contract and Tort

Georgetown University Law Center Research Paper No. 2023/31

(2024). Georgetown Law Faculty Publications and Other Works. 2582.

31 Pages Posted: 19 Feb 2024

See all articles by Tim Friehe

Tim Friehe

University of Marburg

Joshua C. Teitelbaum

Georgetown University Law Center

Date Written: June 04, 2024

Abstract

We study situations in which a single investment serves the dual role of increasing the expected value of a contract (a reliance investment) and reducing the expected harm of a post-performance accident (a care investment). We show that failing to account for the duality of the investment leads to inefficient damages for breach of contract and inefficient standards for due care in tort. Conversely, we show that accounting for the duality yields contract damage measures and tort liability rules that provide correct incentives for efficient breach and reliance in contract and for efficient care in tort.

Keywords: contract, duality, efficiency, externalities, tort. JEL classifications: K12, K13

JEL Classification: K12, K13

Suggested Citation

Friehe, Tim and Teitelbaum, Joshua C., Duality in Contract and Tort (June 04, 2024). Georgetown University Law Center Research Paper No. 2023/31, (2024). Georgetown Law Faculty Publications and Other Works. 2582., Available at SSRN: https://ssrn.com/abstract=4729392 or http://dx.doi.org/10.2139/ssrn.4729392

Tim Friehe

University of Marburg ( email )

Universitätsstrasse 24
D-35032 Marburg, D-35032
Germany

Joshua C. Teitelbaum (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue NW
Washington, DC 20001
United States
202-661-6589 (Phone)

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