Duality in Contract and Tort

Authors

Tim Friehe, University of Marburg, Public Economics Group
Joshua C. Teitelbaum, Georgetown University Law CenterFollow

Document Type

Article

Publication Date

2024

DOI

10.2139/ssrn.4729392

Abstract

We study situations in which a single investment serves the dual role of increasing the expected value of a contract (a reliance investment) and reducing the expected harm of a post-performance accident (a care investment). We show that failing to account for the duality of the investment leads to inefficient damages for breach of contract and inefficient standards for due care in tort. Conversely, we show that accounting for the duality yields contract damage measures and tort liability rules that provide correct incentives for efficient breach and reliance in contract and for efficient care in tort.

Scholarly Commons Citation

Friehe, Tim and Teitelbaum, Joshua C., "Duality in Contract and Tort" (2024). Georgetown Law Faculty Publications and Other Works. 2582.
https://scholarship.law.georgetown.edu/facpub/2582