Seana Shiffrin’s paper is one of two papers we will discuss this week. On Wed. we will conclude our discussion of Shiffrin’s paper and begin discussing a paper by Steven Shavell that is a reply to it.

At issue between the two is the moral significance of two remedies for breach of contract, “specific performance” (i.e., the legally forced performance of the action contracted) and “expectation damages” (i.e., payment, to the party suffering the breach, of the monetary value that the performance has to him or her—see over for a classic description of this and some alternative remedies). Specific performance is in fact employed as a legal remedy only in a narrow range of circumstances, and (as will be clear in her conclusion) Shiffrin really doesn’t challenge this. Her main concerns are (i) whether specific performance is morally required and (ii) how contract remedies are justified in cases where it is not legally required.

You’ve encountered a somewhat analogous dispute earlier in the course: Holmes questioned the distinction between taxation and punishment while Hart defended it. For Holmes, the pragmatic equivalence of taxation and punishment lay in their role as incentives for certain sorts of behavior. In a somewhat similar way, expectation damages provide an incentive not to break contracts and thus to perform in the way a remedy of specific performance would require. And, while expectation damages do not provide an incentive for performance when the value of non-performance is higher than the damages, it is often argued that a breach of contract in such cases (an “efficient breach”) is a good thing and should be encouraged. In opposition to Holmes’ views on punishment and taxation, Hart noted that the imposition of punishment marks an action as wrong while imposition of a tax does not. In the case of contracts, the analogous question is whether there is any wrong when one party does not perform but does pay expectation damages. Shavell had argued that there is none, and Shiffrin criticizes his argument.

Shiffrin’s criticism of Shavell is laid out in her introduction and §I; we will discussion these on Monday. On Wednesday, we will discuss her §II, where she provides a positive argument for the moral significance of performance of the contract’s terms. (We will also begin discussing Shavell’s reply to her criticism on Wednesday; there will be a separate reading guide for that part of the assignment.)