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

Abstract

This contribution argues that motive matters in cases of breach of contract. More specifically, deliberateness of breach of contract matters in the application of remedies for breach of contract. This 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 soft law instruments with a strong ‘continental’ nature such as the Principles of European Contract Law (PECL) and the Draft Common Frame of Reference (DCFR) are also included. Sometimes, in the jurisdictions and instruments mentioned, deliberateness of the breach is considered to be relevant, but more often the element of deliberateness is neglected or even denied when disappointed creditors seek remedial relief. This contribution pleads for a more consistent approach to the phenomenon of deliberate breach of contract and for improving the position of the creditor in terms of access to remedies in contract. Creditors should have easier access 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 profits. 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 case of deliberate breach of contract.