Tareq Al-Tawil
Abstract
This article discusses the moral objection to the efficient breach theory, specifically the objection that it is not based upon a moral obligation to perform a contract. The efficient breach theory endorses the immoral behaviour of breaching a promise whenever the consequences of breach are considered to be superior (in the sense that they are more efficient or better) to those of performance. It considers that contracts (namely, those promises in which legal rules and institutions are involved) are simply vehicles for achieving economic efficiency. The efficient breach theory has been challenged by a number of critics. It is the idea underlying promissory obligations that a promise excludes or ignores the ordinary grounds – for example, utilitarian grounds – that a promisor may bear in mind and consider in the course of making the decision about whether they should perform the promise. This characteristic of promises can be explained by saying that a promise creates an exclusionary reason for action. This article also addresses two crucial questions. First, why do promises create exclusionary reasons for action in the first place? Without answering this question, it would be difficult to argue that promises should be understood differently from the way the efficient breach theory understands them. Second, how do we decide when breaching a promise is or is not immoral? This question is significant because without such knowledge, it would be difficult to argue that the efficient breach theory endorses the immoral behaviour of promise-breaking once a better opportunity presents itself.
Al-Tawil T. The Efficient Breach Theory: The Moral Objection. Griffith Law Rev. 2011;20(2):449-481.