Is Being Dumped Like a Breach of Contract? A Response

This is a response to Is Being Dumped Like a Breach of Contract by Professor Mark D. White.

In his article, Professor White examines a romantic break-up and applies contract law theory. He begins with an example:

Let’s say Amy agrees to sell her car to Bill for $3,000, which is the most Bill is willing to pay. (Amy’s a great negotiator.) While Bill’s getting the money together, along comes Carlos, who offers Amy $4,000 for her car. What should Amy do?

There are two ways to look at Amy’s situation, corresponding to two approaches to contract law. (For our purposes, we can consider the verbal agreement between Amy and Bill to be a contract.)[1]

One view is that a contract is a promise, a view that implies a moral obligation on Amy’s part to honor her agreement with Bill despite the better offer from Carlos. The other view is that contracts are meant merely to enable people to maximize total value through mutually beneficial transactions. This will happen only if Amy breaks the agreement with Bill and sells the car to Carlos, who places a higher value on the car than Bill does.

Professor White argues that contracts should be treated like promises with moral weight, and that we should be somewhat uncomfortable with Amy's decision to sell the car to Carlos instead of Bill. The article then proceeds to apply this analysis to a relationship context. What if, Professor White postured, we were talking about romance instead of automobile? If Amy and Bill are in a relationship, and Carlos seems to offer a better deal (for whatever reason, Amy thinks that he would be a better boyfriend), so Amy leaves Bill for Carlos.

Professor White points out that both the contract and relationship anology deal with "a commitment that is broken in favor of a better alternative," but that the nature of the commitment differs. "A traditional contract is meant to bind both parties to the terms they originally agreed upon even when—especially when—circumstances change." Whereas, in a relationship, both partners stay in the relationship at their own pleasure and neither is obligated to stay if he or she wants out.

In Part 2 of his article, Professor White discusses lawsuits for breach of contract to marry, and concludes that Bill can look at his break-up with Amy as a signal that the relationship may not have been as solid as he thought.

Legal Remedies

What Professor White does not explore in his well-written article, however, is legal remedy. This presents an enormous divergence between contract law and being dumped. In Professor White's example, where Amy promises to sell her car to Bill for $3,000, and then ends up selling her car to Carlos for $4,000, the result is that Bill can sue Amy. Bill can sue Amy for his "expectation damages"; that is, whatever benefit he expected from gaining the car.

Expectation Damages

For example, let's say that since Amy deprived Bill of the car, Bill has to now find a comparable car, and the only car that he can find costs $3,500. This means that if Bill sues Amy in court, Amy would have to pay Bill $500, which is the difference between the agreed-upon $3,000 and the $3,500 Bill had to eventually pay. Bill is put into as good of a position as he would have been, had Amy not breached the contract. This is the basis of contract law.

Now, let's say that the only comparable car that Bill could find cost $5,000 rather than $3,500 because of changing market conditions. This means that if Bill sues Amy in court, she would ahve to pay him $2000 (the difference between the agreed-upon $3,000 and the $5,000 Bill ended up spending). In this case, would Amy have sold the car to Carlos? No, because she would lose more in the long run. The extra $1,000 she would have gained by selling the car to Carlos would be offset by the $2,000 she would have to pay Bill in court.

This is the concept of efficient breach; this is why legal economists believe that breaching a contract is not necessary morally wrong—because Bill would not be any worse off than he would have been had Amy not breached the contract if the court system works correctly. And Amy will only breach if Carlos's offer is "worth it"; that is, if it is more than what Bill would lose. In contrast, in the relationship setting, Amy will be inclined to leave Bill for Carlos even if the step-up is relatively small.

This, however, violently distinguishes contract law from relationships. If Amy leaves Bill for Carlos, there is no remedy for him. She does not compensate him, and does not put him in a position as good as if she had not breached. Apologies and "it's not you, it's me," will not make up for Bill's loss of expected benefit. This is an important distinction (both moral and consequential) between being dumped and a legal breach of contract that makes comparisons much more complicated.

Specific Performance

Let's return to the example above, where Amy promises to sell Bill the car for $3,000 but then turns around and sells it to Carlos for $4,000. What if Bill cannot find a comparable car? Or if Amy's car is special to him in a way that no other car will do? The legal doctrine of specific performance applies to breach-of-contract cases where there is no suitable replacement. In this case, if Bill makes a compelling case that he cannot find a comparable car (i.e., the car is one-of-a-kind, limited edition, etc.), the court will force Amy to honor her originally contract with Bill.

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This significant aspect of contract law has no parallel in relationships, except perhaps in cultures where divorce is not accessible. However, there is still a difference because in the contract law example, if both Amy and Bill agree to cancel the contract, they can still do so.

Conclusion

I think that Professor White's article is articulate, well-written, and achieves its purpose. However, it does not address a facet of contract law that I find rather defining, which is that the injured party may sue for recompense.

In this way, law is much fairer than love—where there is a breach, there is a remedy.

[1] As a side note, this would not actually be considered a binding contract in court due to the Uniform Commercial Code's Statute of Frauds. Contracts for the sale of goods for over $500 must be made in writing. This, however, is entirely irrelevant to Professor White's point.

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