Performance damages

Abstract

Duties and Coercion Contracting parties have an interest in receiving the performance they are due under their contracts and, when a contract is breached, this interest can support an award of damages. This performance interest is not the only interest which contracting parties have and upholding contractors’ interests is not the only objective of contract law. Nonetheless the recognition and protection of this interest in receiving performance has a good claim to be the defining role of the law of contract. I will not seek to defend that claim here and the arguments which follow do not depend on it. They do, however, suppose that protecting the performance interest is at least one of contract law’s aims. Some doubt even this. ‘The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it, - and nothing else.’ Perhaps Holmes did not mean what his words here appear to mean: that the law gives contracting parties the option not to perform but instead to pay damages. But others have endorsed this view and with it the idea that the law has no particular concern to see that parties obtain the performance they were promised so long as they are not prejudiced by not receiving that performance. Why think this? The law’s standard response to breaches of contract, outside of contractual undertakings to pay money, is not to compel performance but to order damages, even where performance remains possible and is preferred by the claimant. Moreover, these damages will often be insufficient for the claimant to obtain the object of the promised performance from another source. Here then, when it comes to the crunch, the law chooses to give contracting parties not performance but merely compensation for non-performance. Does this not mean that there is, in truth, no legal duty on the defendant to perform, no legal right in the claimant to that performance? No. It would no doubt be possible for a legal system to provide that contracting parties have the option not to perform their ‘contractual’ undertakings, expressly leaving them at liberty to pay damages instead. But this is not what English contract law says.