EFFICIENT BREACH IN THE COMMON EUROPEAN SALES LAW

Against a background where trade is growing and becoming more complicated in modern society, private parties are appealing for more flexibility and freedom in making decisions rather than strictly abiding by the documents they have signed. Correspondingly, the traditional study of contract law has embraced more theoretical resources rather than insist on the traditional conception that breach of the contract is wrong. The school of law and economics, with its efficient breach theory, provided a new approach to explaining contracts and breaches, and challenged the traditional notion of pacta sunt servanda and the moralistic nature of obligation. Rather than to defend expectation damages or to encourage breach, the function of the efficient breach theory, as is suggested in this paper, is to assess the approaches to motivating contract parties to perform the contract unless strictly performing it is not as profitable as what was expected at the time of contract formation.