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On the Topic of the Divergence between Legal and Moral Obligations in Common Law

Published online by Cambridge University Press:  20 July 2015

Tareq Al-Tawil
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If common law is to run parallel to the morality of promissory obligation, it must require the breaching seller to keep his promise, not simply to pay off the buyer. However, in the event of promise-breaking, common law orders the defendant to compensate the claimant for the loss that flows from the breach of the duty to perform. The following questions then arise: why does English law not order the defendant to do the very thing that the substantive duty requires him to do? Why does it not adopt specific performance as the primary remedy? Is it because English law runs against the morality of promise? The answer is ‘no’. A number of justifications have been put forward to explain the common law’s reluctance to award specific performance despite its undoubted acceptance as the appropriate moral response to promise-breaking. This article will explain each and show which is more persuasive.

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Research Article
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Canadian Journal of Law & Jurisprudence , Volume 25 , Issue 1 , January 2012 , pp. 5 - 37
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Copyright © Canadian Journal of Law and Jurisprudence 2012

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References

1. In fact, this position is evident in Section I of the Restatement (Second) of the Law of Contracts (1981): “A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law recognises as a duty”. The Restatement (Second) of the Law of Contracts is one of the most well-recognized and frequently-cited legal treatises.

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35. The Kantian principle of right will be examined in detail below.

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49. Ibid at 270.

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56. Ibid at 722.

57. Ibid at 732.

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63. Smith, Stephen, “Performance, Punishment and the Nature of Contractual Obligation” (1997) 60 Modern LR 360 at 364.CrossRefGoogle Scholar

64. Kimel, supra note 11 at 96-97.

65. As Doug Laycock says: “The reason for [the] rule [that employment contracts will not be specifically enforced against employees] is a substantive law commitment to free labor. Despite the vast social distance between chattel slavery and specific performance of contracts with professional athletes and entertainers, similar policies apply to both…. An order to work on pain of contempt produces servitude that is involuntary when the services are performed.” Laycock, Douglas, The Death of The Irreparable Injury Rule (Oxford: Oxford University Press, 1991) at 169.Google Scholar

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67. Ibid at 99-100.

68. See Steven D Smith, “The Hollowness of the Harm Principle” (September 2004), online: at SSRN: http://ssrn.com/abstract=591327; Smith, supra note 11 at 69-70, 256. According to Mill, the harm principle holds that “the sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is… to prevent harm to others.” Mill, John Stuart, “On Liberty” in Mill, John Stuart, On Liberty and Other Writings, ed by Collini, Stefan (Cambridge: Cambridge University Press, 1989) at 13.Google Scholar

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70. Kimel, supra note 11 at 103.

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72. Kimel, supra note 11 at 103-04. In fact, Kimel’s approach was originally taken from Linzer, supra note 3 at 132.

73. [1998] AC 1 Co-operative Insurance Ltd. See also Koeppel v Koeppel, 3 AD 2d 853, 161 NYS 2d 694 (1957).Google ScholarPubMed

74. In the words of Lord Hoffmann: “In most commercial situations, where the object of the exercise is to make money, damages will be an adequate remedy, even though the breach causes the plaintiff considerable commercial inconvenience”. Co-operative Insurance Ltd, supra note 73 at 11.

75. Similarly in Ryan v Mutual Tontine Westminster Chambers Association [1893] 1 Ch 116 Google ScholarPubMed, the lease of a service flat gave the tenant the right to the services of a porter who was to be “constantly in attendance”. Specific enforcement of this right was refused on the ground that it would have required the constant superintendence by the court, which the court in such cases has always declined to grant. Ibid at 123. For more details on this matter, see Treitel, Guenter, The Law of Contract, 12th ed (London: Sweet & Maxwell, 2007) at 1032–34.Google Scholar

76. Co-operative Insurance Ltd, supra note 73 at 12.

77. Ibid at 15.

78. Webb, Charlie, “Performance and Compensation: An Analysis of Contract Damages and Contractual Obligation” (2006) 26:1 Oxford J Legal Stud 41 at 42.CrossRefGoogle Scholar

79. Ibid.

80. Austin, John, Lectures on Jurisprudence Vol II, ed by Campbell, Robert, 5th ed (London: John Murray, 1885) at Lecture XLV, 367.Google Scholar

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82. Ibid at 105.

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88. López, supra note 28 at 34.

89. Hart, HLA, “Are There Any Natural Rights?” (1955) 64:2 Phil Rev 175 at 180CrossRefGoogle Scholar; Vallentyne, supra note 26 at 12.

90. Kant, Immanuel, The Metaphysics of Morals, translated by Gregor, Mary (Cambridge: Cambridge University Press, 1991) at 63.Google Scholar Kant says that: “Any action is right if it can coexist with everyone’s freedom in accordance with a universal law, or if on its maxim the freedom of choice of each can co-exist with everyone’s freedom in accordance with a universal law.” Ibid at 56.

91. As Weinrib states: “the parties to a corrective justice transaction are equal in a very peculiar way: the equality abstracts from the particularity of the parties’ social rank or moral character to the sheer relationship of wrongdoer and sufferer. Corrective justice treats the parties as equals because all self-determining beings, regardless of rank or character, have equal moral status. The conjunction of right and duty is simply this equality of self-determining beings viewed juridically, from the standpoint of the correlativity of one person’s action and its effects on another.” Weinrib, Ernest, “The Gains and Losses of Corrective Justice” (1994) Duke LJ 277 at 292.CrossRefGoogle Scholar For a more complete argument of the connection between corrective justice and Kantian right, see Benson, Peter, “The Basis of Corrective Justice and Its Relation to Distributive Justice” (1992) 77 Iowa LR 515 at 601-24Google Scholar; Heyman, Steven, “Aristotle on Political Justice” (1992) 77 Iowa LR 851 at 860-63.Google Scholar

92. See Stoljar, supra note 8 at 269.

93. See Giglio, Francesco, “Restitution for Wrongs: A Structural Analysis” (2007) 20:1 Can J Law & Juris 5 at 25.CrossRefGoogle Scholar

94. Consider the following example. Suppose that a contractor promises to build a house to certain specifications, one of which is that Brand X pipes are to be used in the plumbing. The contractor builds the house according to the specifications, save that he uses different materials, installing Brand Y pipes rather than Brand X. In order to calculate the claimant’s financial loss from this breach, the court must determine what the claimant stood to gain from the performance of the contract. Inasmuch as Brand Y is equal in quality, appearance, market value and cost to Brand X, the use of Brand Y pipes does not affect the value of the building work (whether this is assessed at market rates or by reference to the value placed on the work by the claimant). So, no financial loss is suffered by the claimant. But still the claimant has not received the exact performance he contracted for. In such a case, therefore, if the claimant aims to force the defendant to deliver the promised performance, it will be difficult to argue that compensation can give effect to his interest in having the contract performed as specified. This proves that compensatory damages cannot and should not be said to equate to enforced performance. This example is based on the facts of Jacob & Youngs v Kent, 230 NY 239, 129 NE 889 (1921).Google Scholar

95. A monetary award can sometimes be described as a substitute for the claimant’s (primary) right that has been infringed by the defendant. More specifically, the court may award the claimant damages measured on a ‘cost of cure’ basis. On this basis, the claimant is given the sum of money needed to enable him to obtain from a different source the performance for which he contracted. Typically, compensatory damages merely respond to any direct and/or consequential loss which may flow from the breach of the claimant’s primary right to performance and not to the breach itself. Yet a cost of cure award is intended to allow a claimant to cure the breach itself; it does not compensate for any financial losses. Value of loss damages and cost of cure damages do not share the same objective—they are fundamentally different. For example, in Radford v de Froberville [1977] 1 WLR 1262 Google Scholar, the defendant breached his obligation to build a wall that would separate his land from the claimant’s. The claimant sued for the cost of building the wall. The court awarded the cost of cure although the difference between the value of the claimant’s land with or without the wall was almost nil. The cost of cure is greater than the value of loss, and thus cannot be understood as compensatory. It is rather a substitute for ordinary specific relief. As Stephen Smith has argued: “‘Cost of cure’ awards are best explained as a form of substitute specific relief; their aim is not to compensate the plaintiff for the value or utility of whatever was lost, but to eliminate or undo the physical change in the plaintiff’s world that has been or will be brought about by the defendant’s breach of duty… Payment of the cost of cure is the closest possible substitute for what the defendant should have done originally. Having failed in his primary substantive duty (to perform a contract, to not injure), there arises at the moment of failure a substitute duty to achieve the same end (as near as possible) by paying for substitute performance.” Smith, Stephen, “The Law of Damages: Rules for Citizens or Rules for Courts?” in Saidov, Djakhongir & Cunnington, Ralph, eds, Contract Damages: Domestic and International Perspectives (Oxford: Hart, 2008) at 60–61.Google Scholar For a similar view on this matter, see Webb, Charlie, “Justifying Damages” in Neyers, Jason, Bronaugh, Richard & Pitel, Stephen, eds, Exploring Contract Law (Oxford: Hart, 2009) at ch 6.Google Scholar

96. See Webb, supra note 78 at 45; Zakrzewski, supra note 60 at 102-03, 165-66.

97. See Mitchell, Catherine, “Remedial Inadequacy in Contract and the Role of Restitutionary damages” (1999) 15 J Contract Law 133 at 150Google Scholar; Mitchell, Catherine, “Promise, Performance and Damages for Breach of Contract” (2003) J Obligations & Remedies 67 at 69.Google Scholar

98. See Shiffrin, supra note 2 at 728.

99. See Webb, supra note 78 at 46.

100. Ibid.

101. Ibid at 49.

102. See Smith, supra note 11 at 119.

103. [1982] EWCA Civ 5.

104. See Webb, supra note 78 at 43.

105. See generally Goetz, Charles & Scott, Robert, “The Mitigation Principle: Toward a General Theory of Contractual Obligation” (1983) 69 Va LR 967 at 969.CrossRefGoogle Scholar

106. Treitel, supra note 75 at 910.

107. Bridge, Michael, “Mitigation of Damages in Contract and the Meaning of Avoidable Loss” (1989) 105 Law Q Rev 398 at 399.Google Scholar

108. See Smith supra note 11 at 428; Shiffrin, supra note 2 at 724.

109. See Webb, supra note 78 at 66.

110. Shiffrin, supra note 2 at 725.

111. See Kimel, supra note 11 at 112.

112. Ibid.

113. Ibid at 111.

114. Ibid.

115. Ibid.

116. Ibid.

117. Ibid.

118. See Eisenberg, supra note 12 at 1044.

119. See Stigler, George, “The Economics of Information” (1961) 69:3 J Pol Econ 213.CrossRefGoogle Scholar

120. Ibid.

121. As Tomlinson J observed in Britvic Soft Drinks Ltd v Messer UK Ltd [2002] 1 Lloyd’s Rep 20 at 46Google Scholar the law of contract adopts a “tender approach to those who have been placed in a predicament by a breach of contract.” Therefore the defendant, as a contract-breaker, is not in a position to ask the court to make onerous demands. See also Pilkington v Wood [1953] Ch 770.Google Scholar See generally McKendrick, Ewan, Contract Law: Text, Cases, and Materials, 2nd ed (Oxford: Oxford University Press, 2005) at 1099–101.Google Scholar

122. See Warkol, Craig, “Resolving the Paradox between Legal Theory and Legal Fact: the Judicial Rejection of the Theory of Efficient Breach” (1998) 20 Cardozo LR 321 at 349-50.Google Scholar

123. See Schwartz, Alan, “The Case for Specific Performance” (1979) 89 Yale LJ 271 at 277CrossRefGoogle Scholar (elaborating on undercompensatory damages such as emotional distress).

124. See Eisenberg, supra note 12 at 995-96.

125. Ibid at 995; Khouri, supra note 10 at 749.

126. See Poole, Jill, Textbook on Contract Law, 7th ed (Oxford: Oxford University Press, 2004) at 463.Google Scholar

127. [1996] 1 AC 669.

128. See Lando, Henrik & Rose, Caspar, “On The Enforcement Of Specific Performance In Civil Law Countries” (2004) 24:4 Int’l Rev L & Econ 473 at 483-84.CrossRefGoogle Scholar

129. In English Law the law on contempt is partly set out in case law, and partly specified in the Contempt of Court Act 1981. Under English law, civil judges have the power to commit a party to serve a term of imprisonment for contempt of civil orders. In England and Wales, prior to the Contempt of Court Act 1981, sentences could be indefinite. Now, section 14(1) of that Act provides that a sentence of imprisonment for contempt of court must be for a fixed term, which must not exceed two years in superior court, or one month in an inferior court. Section 14(1) also gives the judge the power to release a Contemnor at a point earlier than the end of the fixed term, when the Contemnor seeks to purge his contempt (for example, by providing the information that he has been ordered to provide) and the court is convinced of his sincerity. For more details on Criminal and Civil Contempt of Court, see Miller, CJ, Contempt of Court, 3d ed (Oxford: Oxford University Press, 2000).Google Scholar

130. [1970] Ch 128, [1969] 3 All ER 1062 at pp 137 and 1063 respectively.

131. See Eisenberg, supra note 12 at 1020; Lando & Rose, supra note 128 at 483; Rendleman, Doug, “The Inadequate Remedy at Law Prerequisite for an Injunction” (1981) 33 U Fla LR 346 at 355-56.Google Scholar

132. In the words of Enzo Cannizzaro, “proportionality … allows the distinguishing among various forms and tools of reaction to wrongful acts … and requires that the response be appropriate to the particular aim sought and not disproportionate to the offence that provoked it.” Cannizzaro, Enzo, “The Role of Proportionality in The Law of International Countermeasures” (2001) 12:5 Eur J Int’l Law 889 at 915-16.CrossRefGoogle Scholar

133. See Yorio, supra note 58 at 445.

134. See Eisenberg, supra note 12 at 1021.

135. See Lando & Rose, supra note 128 at 483-84. See also Shiffrin, supra note 2 at 733 (discussing how the difficulty of ordering and supervising performance in some cases justifies the common law’s reluctance to enforce the morality of promissory obligation or specific performance).

136. Both Henrik Lando and Caspar Rose argue that specific performance seems to be in low demand among claimants for at least two reasons. The first is that when substitute performance is homogeneous or fungible goods such as wheat, coal or steel which are freely available in the marketplace, it is often easier for the claimant to mitigate the loss consequent on the breach and claim damages than to claim specific performance. In practice, litigation takes time, which means that specific performance is neither awarded nor delivered instantaneously. A suit for specific performance is not finally resolved until months or years after the breach. A long time will pass between breach and verdict, and it may be much longer again to the eventual enforcement of performance, given that the defaulting party can prolong the case through appeals. The second reason is that the claimant may fear that before the time of the verdict comes, enforcing his primary right to performance may well made impossible by the defendant in which case the claim will anyway be converted into monetary claim. See Lando & Rose, supra, note 135 at 486.

137. See Schwartz, supra note 123 at 276-78.

138. See Yorio, supra note 58 at 525.

139. See Sharpe, Robert J, Injunctions and Specific Performance (Toronto, ON: Canada Law Book, 1983) at 400–04 Google Scholar; Eisenberg, supra note 12 at 1025. See also Leff, Arthur, “Injury, Ignorance and Spite—The Dynamics of Coercive Collection” (1970) 80:1 Yale LJ 1 at 21CrossRefGoogle Scholar; Macaulay, Stewart, “Non-contractual Relations in Business: A Preliminary Study” (1963) 28:1 Am Sociological Rev 55 at 66.CrossRefGoogle Scholar

140. See Eisenberg, ibid at 1026.

141. See Sharpe, supra note 139 at 401; Dobbs, supra note 13 at 195. In the absence of detrimental reliance on the part of the seller, it is difficult to see why the buyer should be held to the remedy of specific performance of which he initially selects. For more details on detrimental reliance, see Treitel, supra note 75 at 109-10.

142. Corbin, Arthur, Contracts, 2nd ed (St. Paul, MN: West, 1964) at 462.Google Scholar

143. (1922), 65 DLR 320 (NSSC). See also Macnaughton v Stone [1950] 1 DLR 330, [1949] OR 853 (HCJ).Google Scholar

144. Sharpe, supra note 139 at 404.

145. Eisenberg, supra note 12 at 1026.