The Immorality and Inefficiency of an Efficient Breach

Abstract

The essay argues that this emerging contract doctrine is both immoral - principally because it degrades social cooperation and is individually dishonorable - and inefficient - in part because the generally utilized measures of efficiency ignore other costs that ultimately render an opportunistic breach inefficient and that lead to the discounting of other goods and services in a market.

Given the rise in consumer insecurity and the continuing fallout from the infectious greed of corporate entities, discussion with respect to the relationship between morality, law, and the business world is patently necessary. An analysis of this doctrine, from a moral and economic standpoint, can shed meaningful light on this evolving and often precarious relationship, and can more narrowly address whether the doctrine of efficient breach should be promoted in real life, or confined to a mere academic concept advanced by leaders of the law and economics school of thought, including Richard Posner.

Keywords: contracts, efficient breach, morality

JEL Classification: A13, D62, K00, K12