In defence of breach: a critique of restitution and the performance interest

Abstract

The modern argument that the law of obligations should be recast in restitutionary terms appears to have achieved its victory over contract in A-G v Blake. Although ritual obeisance to compensatory damages is made, Blake recognises a general restitutionary remedy for breach of contract the logic of which must be to undermine completely the expectation interest. The general effect of restitutionary rather than expectation-based remedies will be to furnish a greater deterrent against breach, a result welcomed by advocates of the ‘performance interest’. All this would be well were all breaches ‘wrongs’ which should be deterred. This, however, is not so. Breach has a positive, indeed essential, role in the operation of the law of contract as the legal institution regulating economic exchange and pursuit of its general prevention is inconsistent with the operation of a market economy. The victory of restitution therefore is illusory: it is impossible that the position established in Blake can be sustained.