Better than Fuller: A Two Interests Model of Remedies for Breach of Contract

Published date01 March 2015
Date01 March 2015
Better than Fuller: A Two Interests Model of Remedies
for Breach of Contract
David Campbell*
The attempt to combine the contractual interests properly so-called with the restitution interest
in the Fuller and Purdue three interests model of remedies for breach of contract is ineradicably
incoherent. Stimulated by reflection on contemporary restitution doctrine’s understanding of the
quasi-contractual remedies of recovery and quantum meruit, this paper argues that the complete
elimination from the law of contract of the restitution interest, which incorporates those remedies
into the three interests model, would improve both the coherence of the model of contractual
interests and the substantive law of remedies for breach.
In the Preface to his Three Plays for Puritans written in 1900, George Bernard
Shaw asked whether it was now possible to write plays which were ‘better
than Shakespear?’1Those who have some knowledge of Shaw will be more
surprised, as he himself ironically claimed they would be, that he did not
simply profess to write better plays than Shakespeare than that he ever raised
the question whether it was possible to do so. I would not wish to have the
degree of confidence which more than shaded into arrogance that was central
to Shaw’s beguiling but exasperating character, wonderful creative writing, and
in some respects authoritarian politics, but it does fall to my lot to summon the
confidence to ask a question similar to Shaw’s. In my case, the question is:
better than Fuller?
For if no field of discourse other than the monotheistic religions remains
dominated by a single figure to remotely the same degree as Shakespeare
dominates what Harold Bloom has called ‘the western canon’,2it remains the
case that the understanding of the common law of remedies for breach of
*Lancaster University Law School. Earlier versions of this paper have been presented to the Annual
Conference of the Society of Legal Scholars, Durham University, September 2007; to the Lancashire
Law School, University of Central Lancashire, November 2007; to the University of Melbourne Law
School, Australia, April 2008; to the Fourth Biennial Conference on the Law of Obligations, National
University of Singapore, Singapore, July 2008; to the York Law School, University of York, October
2009; to the Faculty of Law, Hong Kong University, November 2009; and to the Annual Conference
of the Society of Legal Scholars, University of Edinburgh, September 2013. I am grateful to those
attending those presentations, Peter Jaffey, Warren Swain and two anonymous referees for their
comments. See also n 124 below.
1 G. B. Shaw, Three Plays for Puritans (Harmondsworth: Penguin Books, 1946) 29. I have quoted
Shakespeare’s name as Shaw gave it, in line with his attempt to rationalise the English language
which was, in my opinion, wholly symptomatic of what is objectionable in his politics.
2 H. Bloom, The Western Canon (New York NY: Harcourt Brace, 1994).
© 2015 The Author. The Modern Law Review © 2015 The Modern Law Review Limited. (2015) 78(2) MLR 296–323
Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
contract remains dominated by the figure of Lon Fuller. Over the forty years
since what has become the argument for partial disgorgement of gains was put
forward in Wrotham Park Estate Co Ltd vParkside Homes Ltd,3the English law of
remedies has undergone fundamental questioning. If, in light of this, we now
seek to markedly improve upon that law, we can do so only if we ask if it is
possible to go beyond Fuller; to be better than Fuller.
The basic architecture of Fuller’s conception of remedies is, of course, the
three interests model set out in his 1936–1937 paper written with his then
student William Perdue Jr on ‘The Reliance Interest in Contract Damages’.4
Though my own understanding of remedies remains based on Fuller and
Perdue’s thinking,5it will be argued that the three interests model fails to
coherently combine the contractual interests properly so-called, expectation and
reliance, with the restitution interest, and that this can be remedied only by the
complete elimination of the restitution interest from the law of contract to leave
a two interests model of remedies for breach of contract. This two interests
model has the attraction that it brings an essential coherence to Fuller’s archi-
tecture. However, it is put forward, not in pursuit of coherence in itself, but
because this coherence has the practical result of improving the remedies for
breach by placing them on a purely contractual basis.
By focusing on the inadequacy of the relationship of the expectation and reliance
interests to the restitution interest, I would not wish to be thought to believe that
the three interests model has no other inadequacies. A now enormous literature
testifies to the fact that it certainly does, though, of course, to some extent this
simply reflects the significance the model has rightly assumed. No doubt the way
it has perpetuated a confusion between ‘reliance’ as a doctrine of liability and
‘reliance’ as one part of the doctrine of remedies is the most important of these.6
But within the doctrine of remedies itself, it has been incontrovertibly argued
that Fuller and Perdue’s understanding of the reliance interest, particularly of its
relationship to the expectation interest, is also inadequate.7As it cannot be argued
3 [1974] 1 WLR 798 (Ch D). Though it is now largely a matter of legal history, the deve-
lopment of the Wrotham Park remedy is set out in D. Campbell and D. Harris, ‘In Defence
of Breach: A Critique of Restitution and the Performance Interest’ (2002) 22 Legal Studies
4 L. L. Fuller and W. R. Perdue Jr, ‘The Reliance Interest in Contract Damages’ (1936) 46 Yale Law
Journal 52 and (1937) 46 Yale Law Journal 373.
5 D. Harris et al, Remedies in Contract and Tort (Cambridge: CUP, 2nd ed, 2005) 6.
6 This is the basis of Atiyah’s difficulties with the ‘pure expectation’ award of damages: P. S. Atiyah,
‘Contracts, Promises and the Law of Obligations’ in Essays on Contract (Oxford: Clarendon Press,
rev ed, 1990) 33–34.
7 eg in the US, R. Craswell, ‘Against Fuller and Perdue’ (2000) 67 University of Chicago Law Review
99 and in the Commonwealth, D. McLaughlan, ‘Reliance Damages for Breach of Contract’
[2007] New Zealand Law Review 417. Professor McLaughlan regards the reliance interest as
‘redundant’: D. McLaughlan, ‘The Redundant Reliance Interest in Contract Damages’ (2011)
127 Law Quarterly Review 23.
David Campbell
© 2015 The Author. The Modern Law Review © 2015 The Modern Law Review Limited. 297(2015) 78(2) MLR 296–323

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