Deliberate Breach of Contract and Consequences for Remedies: Exploration of a Neglected Area in the Law of Contract

Published date01 March 2014
Date01 March 2014
Subject MatterArticle
21 MJ 1 (2014) 141
M  K*
is contribution argues that motive matters in cases of breach of contract. More speci cally,
deliberateness of breach of contract matters in the application of remedies for breach of
contract.  is comparative contribution focuses on US law and English law, because the
discussion on deliberate breach is most explicit in these jurisdictions. Nevertheless, references
to continental European jurisdictions and to so l aw instruments with a strong ‘continental’
nature such as the Principles of European Contract Law (PECL) and the Dra Common
Frame of Reference (DCFR) are also included. Sometimes, in the juri sdictions and instruments
men tio ned , d elib era ten ess of t he b rea ch i s co nsi der ed t o be rel eva nt, but m ore o en the element
of deliberateness is neglected or even denied when disappointed creditors seek remedial relief.
is contribution pleads for a more consistent approach to the phenomenon of deliberate
breach of contract and for improving the position of the creditor in ter ms of access to remedies in
contract. Creditors should have easier acce ss to performance of the contract and termination.
Barriers to expectation damages in terms of burden of proof and foreseeability should be
lowered. Creditors should have access to account of pro ts. Penalty clauses should be upheld
and not be subject to mitigation in case of deliberate breach of contract, and debtors should
not be able to rely on exclusion or limitation clauses in c ase of deliberate breach of contract.
Keywords: account of pro ts; damages; deliberate breach of contract; performance;
* Martijn van Kogelenberg LL.M. M A (Leiden), M.Jur. (Oxford), PhD (Rotterda m) is a post-doctoral
researcher at the Erasmus School of Law. He defended his PhD thesis on deliberate breach of cont ract
on 30 November 2012. S ee M. van Kogelenberg, Motive Matters! An Exploration of the Notion
‘Deliberate Breach of C ontract’ and its Consequen ces for the Application of Remedie s (diss . Rott erdam
2012, Intersentia , Cambridge 2013).
Martijn va n Kogelenberg
142 21 MJ 1 (2014)
A mining company promises a landowner to make certain repairs to a parcel of land
a er the mining.  is promise is part of a contractual agreement. A er some internal
deliberations, the mining company refuses to make the promised repairs, because the
repairs are considered to be too costly.  e cost of performance of the obligation will
exceed the diminution of the value when the repairs are not made.  is action by the
mining company amounts to breach of contract.  e question arises as to what the
landowner can do as a result of this breach of contract. Can he claim performance,
damages to the extent of cost of performance, or only damages to the extent of loss of
value of the parcel of land?1
e availability of the remedies may depend on a range of factors such as the
seriousness of the breach or the type of damage. However, it is not clear whether the
motive of the debtor is relevant for the application of remedie s. In other words: if a debtor
commits breach deliberately, does the deliberateness of the breach a ect the availability
and/or the extent of the remedies to the disappointed creditor and if not, should the
factor of deliberateness do so?
is comparative contribution intentionally avoids ai ming at a speci c jurisdiction,
because the subject of deliberate breach of contrac t could be of interest for those interested
in the law of contract in general.In particular, this contribution will draw arguments
and examples mainly from the major representative common law jurisdictions, id est,
the law of contract in Engla nd and Wales, and the United States. Nevertheless , references
to major European jurisdictions as well as to so law supranational instruments such
as the Principles of European Contract Law (PECL) and the Dra Common Frame of
Reference (DCFR) are also included. A consistent and coherent approach of the notion
of deliberate breach and its consequences for remedies in any legal system is virtually
absent – US law incorporates the most developed thoughts on this topic, though not in
a particula rly coherent way – implying that th is contribution could be relevant for civi l
law and common law oriented scholars in contract l aw.
First, deliberate breach of contract as a phenomenon is explained. A more detailed
analysis shows that no consistent de n it io n o f t hi s te rm ex i st s, ei t he r i n t he la w o f c on tr ac t
in general, or within a speci c legal system (section 2). Second, this contribution tr ies to
nd and detect traces in the law of contract where the law in the books or the courts
hint at the existing relevance of deliberateness for application of remedies in contract
(section 3). Subsequently, this contribution presents arguments (section 4) which lead to
recommendations to change the law of contrac tual remedies (section 5). It will be arg ued
that deliberateness should matter in deciding which remedies should be available to the
creditor and to what extent. More particularly, this contribution argues that a creditor
1 e fac ts are based on the famous c ase Peevyhouse v. Garland C oal & Mining Co. 382 P.2d 109 (Okla.

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