Faculty Bibliography

The primary causal requirement that must be met for a negligent party to be held liable for a harm is a demonstration that the harm would not have occurred if the party had not been negligent. Thus, for a speeding driver to be found liable for harm done in a car accident, it must be shown that the accident would not have happened if the driver had driven at a reasonable speed. The main point made here is that this basic causal requirement may be difficult to satisfy and hence may interfere with the discouragement of negligence. Therefore, an alternative and usually easier-to-meet causal requirement is proposed — that the harm would not have occurred if the party had not been engaged in his activity (if the driver had not been driving).

The myriad uncertainties common to the process of adjudication—concerning evidence that opposing parties will present, legal issues that will become relevant, illness of witnesses, and the like—lead to two social problems. First, when unanticipated events occur, the information that parties will be able to provide courts may be inadequate. And second, preparation effort invested by parties may be wasted: whereas parties will tend to prepare for numerous possible events in adjudication, many will not come to pass and thus much effort will be for nought. Both of these problems are addressed by the granting of continuances. Inability to present evidence for want of time will be directly remedied by the giving of continuances; and wasted preparation effort will be reduced because the ability to obtain continuances when uncertain events occur will lessen the need to prepare for them. But the use of continuances involves various costs of delay, meaning that the decision to grant continuances should be guided by an economic calculus. That calculus is developed in the theory presented in this article and the actual use of continuances is discussed.

The prison time actually served by a convicted criminal depends to a significant degree on decisions made by the state during the course of imprisonment—notably, on whether to grant parole. We study a model of the adjustment of sentences assuming that the state’s objective is the optimal deterrence of crime. In the model, the state can lower or raise a criminal’s initial sentence on the basis of deterrence-relevant information obtained during imprisonment. Our focus on sentence adjustment as a means of promoting deterrence stands in contrast to the usual emphasis in sentence adjustment policy on avoiding recidivism.

In this article I first describe the basic principles that parents employ in disciplining their children. The description is based on a survey of parents, the major results of which are that parental sanctions are premised on wrongdoing—not on the mere causation of harm; that parental sanctions tend to be greater when wrongdoing results in harm than when it does not; that parental sanctions for intentionally harmful conduct exceed those for negligence; and that parental sanctions are not raised when the probability that wrongdoing would be discovered is low.I then develop a theory to explain the principles of discipline as functional for parents. The kernel of the theory is that the rules of discipline maximize the expected utility of parents—assuming that the utility of parents is reduced by the occurrence of harm and also reflects the well–being of their children.After elaborating the theory, I comment on several related issues, including the possible influence of childhood experience on our preferences as adults over legal rules; and I remark on the similarity between the principles of criminal law and those applied by parents in disciplining their children.

This article proposes a scheme of liability that would desirably control accident risks in the coming world in which motor vehicles will be autonomous. In that world, travelers will not be drivers, rendering liability premised on driver fault irrelevant as a means of reducing accident dangers. Moreover, no other conventional principle of individual or of manufacturer liability would serve well to do so. Indeed, strict manufacturer liability, recommended by many commentators, would actually tend to leave accident risks unchanged from their levels in the absence of liability. However, a new form of strict liability – the hallmark of which is that damages would be paid to the state – would be superior to conventional rules of liability in alleviating accident risks and would be easy to implement.

Courts generally insist that two criteria be met before imposing strict liability rather than basing liability on the negligence rule. The first--that the injurer’s activity must be dangerous--is sensible because strict liability possesses general advantages over the negligence rule in controlling risk. But the second--that the activity must be uncommon--is ill-advised because it exempts all common activities from strict liability no matter how dangerous they are. Thus, the harm generated by the large swath of common dangerous activities--from hunting, to construction, to the transmission of natural gas--is inadequately regulated by tort law. After developing this theme and criticizing ostensible justifications for the uncommon activity requirement, the article addresses the question of how it arose. The answer is that its legal pedigree is problematic: it appears to have been invented by the authors of the first Restatement of Torts. The conclusion is that the uncommon activity requirement for the imposition of strict liability should be eliminated.

The theory of insurance is considered here when an insured individual may be able to sue another party for the losses that the insured suffered—and thus when an insured has a potential source of compensation in addition to insurance coverage. Insurance policies reflect this possibility through so-called subrogation provisions that give insurers the right to step into the shoes of insureds and to bring suits against injurers. In a basic case, the optimal subrogation provisions involve full retention by the insurer of the proceeds from a successful suit and the pursuit of all positive expected value suits. This eliminates litigation risks for insureds and results in lower premiums—financed by the litigation income of insurers, including from suits that insureds would not otherwise have brought. Moreover, optimal subrogation provisions are characterized in the presence of moral hazard, administrative costs, and non-monetary losses, and it is demonstrated that optimal provisions entail sharing litigation proceeds with insureds in the first two cases but not when losses are non-monetary.

The conduct of adjudication is often influenced by motions--requests made by litigants to modify the course of adjudication. The question studied in this article is why adjudication is designed so as to permit the use of motions. The answer developed is that litigants will naturally know a great deal about their specific matter, whereas a court will ordinarily know little except to the degree that the court has already invested effort to appreciate it. By giving litigants the right to bring motions, the judicial system leads litigants to efficiently provide information to courts that is relevant to the adjudicative process.

The theory of insurance is considered here when an insured individual may be able to sue another party for the losses that the insured suffered—and thus when an insured has a potential source of compensation in addition to insurance coverage. Insurance policies reflect this possibility through so-called subrogation provisions that give insurers the right to step into the shoes of insureds and to bring suits against injurers. We show that subrogation provisions are a fundamental feature of optimal insurance contracts because they relieve litigation-related risks and result in lower premiums—financed by the litigation income of insurers. This income includes earnings from suits that insureds would not otherwise have brought. We also characterize optimal subrogation provisions in the presence of loading costs, moral hazard, and non-monetary losses.

Although the corrective tax has long been viewed by economists as a desirable remedy for the problem of harmful externalities. Liability, in contrast, has great importance in controlling harmful externalities. I compare the tax and liability in theory and suggest that the conclusions help explain the observed predominance of liability over taxation, except in the area of pollution. The following factors are emphasized: inefficiency of incentives under taxes when the state cannot practically take into account all variables that significantly affect expected harm; efficiency of incentives under strict liability, which requires only that actual harms be measured; efficiency of incentives under the negligence rule; administrative cost advantages of liability deriving from its being applied only when harm occurs; and dilution of incentives under liability when suit is unlikely or injurers cannot pay fully for harm.

This law school casebook was developed by a team of professors at Harvard Law School to introduce students with little or no quantitative background to the basic analytical techniques that attorneys need to master to represent their clients effectively. This casebook presents clear explanations of decision analysis, games and information, contracting, accounting, finance, microeconomics, economic analysis of the law, fundamentals of statistics, and multiple regression analysis. References and examples have been thoroughly updated for this 3rd edition, and exposition of a number of key topics has been reworked to reflect insights gained from teaching these topics using the 1st edition to many hundreds of Harvard Law students over the past decade.

The deterrence of crime and its reduction through incapacitation are studied in a simple multiperiod model of crime and law enforcement. Optimal imprisonment sanctions and the optimal probability of sanctions are determined. A point of emphasis is that the incapacitation of individuals is often socially desirable even when they are potentially deterrable. The reason is that successful deterrence may require a relatively high probability of sanctions and thus a relatively high enforcement expense. In contrast, incapacitation may yield benefits no matter how low the probability of sanctions is—implying that incapacitation may be superior to deterrence.

Economic analysis of law is concerned with (a) determination of the effects of legal rules and (b) evaluation of the desirability of the effects of legal rules, with respect to well-specified definitions of social welfare. This article surveys the approach as it applies to basic areas of law – accident, property, contract, and criminal law – as well as to the litigation process. The economic approach is also contrasted with traditional analysis of law, under which the effects of legal rules are not usually systematically assessed.

The government often provides relief against large risks, such as disasters. A simple, general rationale for this role of government is considered here that applies even when private contracting to share risks is not subject to market imperfections. Specifically, the optimal private sharing of risks will not result in complete coverage against them when they are sufficiently large. Hence, when such risks eventuate, the marginal utility to individuals of governmental relief may exceed the marginal value of public goods. Consequently, social welfare may be raised if the government reduces public goods expenditures and directs these freed resources toward individuals who have suffered losses.

This article develops two points. First, insurance against the risk of legal change is largely unavailable, primarily because of the correlated nature of the losses that legal change generates. Second, given the absence of insurance against legal change, it is generally desirable for legal change to be attenuated. Specifically, in a model of uncertainty about two different types of legal change—in regulatory standards and in payments for harm caused—it is demonstrated that the optimal new regulatory standard is less than the conventionally efficient standard and that the optimal new payment for harm is less than the harm.

A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the influence of litigation costs on the optimal level of damages, assuming that litigation costs rise with the level of damages. Due to this consideration, we demonstrate that optimal damages can lie anywhere between zero and the harm plus the victim's litigation costs.

Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm, whereas compliance with the negligence rule is evaluated only if harm occurs. It is shown in a stylized model that because the use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation. Moreover, this cost advantage suggests that the examination of behavior under the negligence rule should often be more detailed than under regulation—as it frequently is in fact.

We analyze a model in which firms are able to acquire information about product risks and may or may not be required to disclose this information. We initially study the effect of disclosure rules assuming that firms are not liable for the harm caused by their products. Mandatory disclosure is obviously superior to voluntary disclosure given the information about product risks that firms possess, since such information has value to consumers. But firms acquire more information about product risks under voluntary disclosure because they can keep silent if the information is unfavorable. This effect could lead to higher social welfare under voluntary disclosure. The same result holds if firms are liable for harm under the negligence standard of liability. Under strict liability, however, mandatory and voluntary disclosure rules are equivalent because information concerning product risks is irrelevant to consumers.

When would an individual expect adherence to the law to advance the social good? This time-honored question is of more than intellectual interest, for if individuals have some desire to foster social welfare, the answer to it may help to explain and guide actual compliance with the law. In the model that I study, an individual’s knowledge of factors relevant to social welfare is inferior to lawmakers’ in some respects and superior in others. Thus, in assessing whether obeying legal rules would promote social welfare, an individual must consider that rules will impound certain superior information of lawmakers but also that rules may fail to reflect his private information. A second issue that an individual must consider in deciding whether following the law would be desirable is a compliance externality: the effect of the witnessing of his compliance behavior on the compliance behavior of observers. The conclusions from the model are interpreted, including their implications for actual compliance and for the moral obligation to obey the law.

Although the corrective tax has long been viewed by economists as a theoretically desirable remedy for the problem of harmful externalities, its actual use has been limited, mainly to the domain of pollution. Liability, in contrast, has great importance in controlling harmful externalities. I compare the tax and liability here in theory and suggest that the conclusions help to explain the observed predominance of liability over taxation, except in the area of pollution. The following factors are emphasized in the analysis: inefficiency of incentives under taxes when, as would be typical, it would be impractical for the state to incorporate into taxes all of the variables that significantly affect expected harm; efficiency of incentives under strict liability, which requires only that actual harms be measured; efficiency of incentives to exercise precautions under the negligence rule; administrative cost advantages of liability deriving from its being applied only when harm occurs; and dilution of incentives under liability when suit would be unlikely or injurers would not be able to pay fully for harms caused.

Taxation and liability are compared as means of controlling harmful externalities, with a view toward explaining why the use of liability predominates over taxation. Taxation suffers from a disadvantage in the analysis: because taxes do not reflect all the variables affecting expected harm, inefficiency results, whereas efficiency under liability requires only assessment of actual harm. However, liability also suffers from a disadvantage: incentives are diluted because injurers escape suit. Joint use of taxation and liability is examined, and it is shown that liability should be employed fully, with taxation taking up the slack due to escape from suit.

In the aftermath of the Deepwater Horizon accident and the BP oil spill, the government imposed a moratorium on deepwater oil drilling in the Gulf of Mexico. The question addressed here is whether on grounds of policy BP should be held responsible for moratorium-related economic losses caused by the spill. The answer that is developed is no. The reason, in essence, is that although the spill caused the moratorium, the moratorium might be viewed as a socially beneficial event on net because its purpose was to avert a significant danger.

This law school casebook was developed by a team of professors at Harvard Law School to introduce students with little or no quantitative background to the basic analytical techniques that attorneys need to master to represent their clients effectively. This casebook presents clear explanations of decision analysis, games and information, contracting, accounting, finance, microeconomics, economic analysis of the law, fundamentals of statistics, and multiple regression analysis. References and examples have been thoroughly updated for this 2d edition, and exposition of a number of key topics has been reworked to reflect insights gained from teaching these topics using the 1st edition to many hundreds of Harvard Law students over the past decade.

In The Uneasy Case for Product Liability, we maintained that the benefits of product liability are likely to be less than its costs for many products, especially widely sold ones. Our article was intended to alter the dominant view held by the judiciary and commentators that product liability has a clear justification on grounds of public policy. We argued instead that a skeptical attitude toward product liability should be adopted. Professors John Goldberg and Benjamin Zipursky strongly criticize our article in The Easy Case for Products Liability Law: A Response to Professors Polinsky and Shavell. To a significant extent, however, they attack a straw man, for they impute to us a radical thesis – that product liability should be eliminated for all widely sold products – that we manifestly did not advance. In fact, we argued that whether product liability is undesirable depends on the particular product. Goldberg and Zipursky also ascribe to us other opinions that exaggerate what we said in our article – notably, they state that we believe that product liability has no beneficial effect on product safety for widely sold products. It is not surprising, therefore, that they are unable to support these mischaracterizations with citations to statements in our article. The major claim that Goldberg and Zipursky develop is that our benefit-cost analysis fails to demonstrate that the case for product liability is uneasy. In our view, their critique is deficient on multiple accounts, including that it contains numerous distortions and errors, and hence does not alter our original conclusion.

In this Article we compare the benefits of product liability to its costs and conclude that the case for product liability is weak for a wide range of products. One benefit of product liability is that it can induce firms to improve product safety. Even in the absence of product liability, however, firms would often be motivated by market forces to enhance product safety because their sales may fall if their products harm consumers. Moreover, products must frequently conform to safety regulations. Consequently, product liability might not exert a significant additional influence on product safety for many products – and empirical studies of several widely sold products lend support to this hypothesis. A second benefit of product liability is that it can improve consumer purchase decisions by causing product prices to increase to reflect product risks. But because of litigation costs and other factors, product liability may raise prices excessively and undesirably chill purchases. A third benefit of product liability is that it compensates victims of product-related accidents for their losses. Yet this benefit is only partial, for accident victims are frequently compensated by insurers for some or all of their losses. Furthermore, the award of damages for pain and suffering tends to reduce the welfare of individuals because it effectively forces them to purchase insurance for a type of loss for which they ordinarily do not wish to be covered. Opposing the benefits of product liability are its costs, which are great. Notably, the transfer of a dollar to a victim of a product accident through the liability system requires more than a dollar on average in legal expenses. Given the limited nature of the benefits and the high costs of product liability, we come to the judgment that its use is often unwarranted. This is especially likely for products for which market forces and regulation are relatively strong, which includes many widely sold products. Our generally skeptical assessment of product liability for such products is in tension with the broad social endorsement of this form of liability.

Governments employ two basic policies for acquiring land: taking it through the exercise of their power of eminent domain, and purchasing it. The social desirability of these policies is compared in a model in which the government’s information about landowners’ valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land from an owner only if its offer exceeds the owner’s valuation. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government’s acquisition will fail if any of the owners refuses to sell. Hence, eminent domain becomes appealing if the number of landowners is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead is a contiguous parcel that may be located anywhere in a region.

Governments employ two basic policies for acquiring land: taking it through the exercise of their power of eminent domain, and purchasing it. The social desirability of these policies is compared in a model in which the government’s information about landowners’ valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land from an owner only if its offer exceeds the owner’s valuation. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government’s acquisition will fail if any of the owners refuses to sell. Hence, eminent domain becomes appealing if the number of landowners is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead is a contiguous parcel that may be located anywhere in a region.

The socially desirable design of the appeals process is analyzed assuming that it may involve either an initial discretionary review proceeding—under which the appeals court would decide whether to hear an appeal—or else a direct appeal. Using a stylized model, I explain that the appeals process should not be employed when the appellant’s initial likelihood of success falls below a threshold, that discretionary review should be used when the likelihood of success lies in a midrange, and that direct appeal should be sought when this likelihood is higher. Further, I emphasize that appellants should often be able to choose between discretionary review and direct appeal, notably because appellants may elect discretionary review to save themselves (and thus the judicial system) expense. This suggests the desirability of a major reform of our appeals process: appellants should be granted the right of discretionary review along with the right that they now possess of direct appeal at the first level of appeals.

The conventional rationale for copyright of written works, that copyright is needed to foster their creation, is seemingly of limited applicability to the academic domain. For in a world without copyright of academic writing, academics would still benefit from publishing in the major way that they do now, namely, from gaining scholarly esteem. Yet publishers would presumably have to impose fees on authors, because publishers would no longer be able to profit from reader charges. If these author publication fees would actually be borne by academics, their incentives to publish would be reduced. But if the publication fees would usually be paid by universities or grantors, the motive of academics to publish would be unlikely to decrease (and could actually increase) – suggesting that ending academic copyright would be socially desirable in view of the broad benefits of a copyright-free world. If so, the demise of academic copyright should probably be achieved by a change in law, for the “open access” movement that effectively seeks this objective without modification of the law faces fundamental difficulties.

There is a widely held view that breach of contract is immoral. I suggest here that breach may often be seen as moral, once one appreciates that contracts are incompletely detailed agreements and that breach may be committed in problematic contingencies that were not explicitly addressed by the governing contracts. In other words, it is a mistake generally to treat a breach as a violation of a promise that was intended to cover the particular contingency that eventuated.

Legal liability for accidents determines the circumstances under which injurers must compensate victims for harm. The effects of liability on incentives to reduce risk, on risk-bearing and insurance (both direct coverage for victims and liability coverage for injurers), and on administrative expenses are considered. Liability is also compared with other methods of controlling harmful activities, notably, with regulation and corrective taxation.

This article surveys the economic analysis of public enforcement of law – the use of public agents (inspectors, tax auditors, police, prosecutors) to detect and to sanction violators of legal rules. We first discuss the basic elements of the theory: the probability of imposition of sanctions, the magnitude and form of sanctions (fines, imprisonment), and the rule of liability. We then examine a variety of extensions, including the costs of imposing fines, mistakes, marginal deterrence, settlement, self-reporting, repeat offences, and incapacitation.

This article surveys the economic analysis of five primary fields of law: property law; liability for accidents; contract law; litigation; and public enforcement and criminal law. It also briefly considers some criticisms of the economic analysis of law.

Legal liability for accidents governs the circumstances under which parties who cause harm to others must compensate them. There are two basic rules of liability. Under strict liability, an injurer must always pay a victim for harm due to an accident that he causes. Under the negligence rule, an injurer must pay for harm caused only when he is found negligent, that is, only when his level of care was less than a standard of care chosen by the courts, often referred to as due care. (There are various versions of these rules that depend on victims’ care, as will be discussed.) In fact, the negligence rule is the dominant form of liability; strict liability is reserved mainly for certain especially dangerous activities (such as the use of explosives). The amount that a liable injurer must pay a victim is known as damages.

When is it socially advantageous for legal rules to be changed in the light of altered circumstances? In answering this basic question here, a simple point is developed-that past compliance with rules tends to reduce the social advantages of change. The reasons are twofold: adjusting to a new legal rule involves costs, and the social benefits of change are only in addition to those of past compliance. The general implications are that legal rules should be more stable than would be appropriate were the relevance of past behavior not recognized and that grandfathering, namely, permitting noncompliance, is sometimes desirable. These points have broad relevance, often explaining what we observe but also indicating possibilities for reform, such as in the regulation of pollution. The analysis is related to the conventional reliance-based justification for the stability of the law, the literature on legal transitions, and economic writing on optimal legal standards.

Economists have long recognized that certainty of contract is essential to a healthy economy. Long-term forward contracts, in particular, help reduce financial risk. Those contracts can only accomplish that goal, however, if parties know the contracts will be enforced. From an economic and policy standpoint, long-term energy contracts should be abrogated only in truly exceptional circumstances. The mere fact that a price seems too high in retrospect does not justify abrogating contracts voluntarily agreed to by sophisticated buyers and sellers. Nor do generalized claims of - market dysfunction - at the time the contract was formed.

This article develops the point that incentive and risk‐bearing problems associated with contractual holdup may justify legal intervention. Contractual holdup is considered both for fresh contracts and for modifications of contracts. One type of legal intervention is flat voiding of contracts. Such intervention tends to be advantageous when holdup situations are engineered. Another type of intervention is price‐conditioned voiding of contracts—voiding only if the price is excessive. This policy tends to be advantageous when contracts are socially desirable (bad weather puts a ship in jeopardy and it needs rescue). Price‐conditioned voiding prevents the imposition of holdup prices but still allows contracts (to tow ships in distress) to be made. Both types of legal intervention in contracts and their modifications are employed by courts to counter problems of pronounced holdup. In addition, various price control regulations appear partly to serve the same objective.

Overly strict legal standards are commonly thought to discourage parties from engaging in socially desirable activities. It is explained here, however, that excessive legal standards cannot lead to undesirable curtailment of activities when legal standards are enforced by liability for negligence, essentially because parties can choose to be negligent rather than comply. But excessive legal standards can lead to undesirable reduction of activities when adherence to the standards is required by the regulatory system.

How should moral sanctions and moral rewards - the moral sentiments involving feelings of guilt and of virtue - be employed to govern individuals' behavior if the objective is to maximize social welfare? In the model that we examine, guilt is a disincentive to act and virtue is an incentive because we assume that they are negative and positive sources of utility. We also suppose that guilt and virtue are costly to inculcate and are subject to certain constraints on their use. We show that the moral sentiments should be used chiefly to control externalities and further that guilt is best to employ when most harmful acts can successfully be deterred whereas virtue is best when only a few individuals can be induced to behave well. We also contrast the optimal use of guilt and virtue to optimal Pigouvian taxation and discuss extensions of our analysis.

Discretion is examined as a feature of the design of rule-guided systems. That is, given that rules have to be administered by some group of persons, called adjudicators, and given that their goals may be different from society's (or a relevant organization's), when is it socially desirable to allocate discretionary authority to the adjudicators and, if so, to what extent? The answer reflects a trade-off between the informational advantage of discretion - that adjudicators can act on information not included in rules - and the disadvantage of discretion - that decisions may deviate from the desirable because adjudicators' objectives are different from society's. The control of discretion through limitation of its scope, through decision-based payments to adjudicators, and through the appeals process, is also considered.

This chapter surveys the theory of the public enforcement of law—the use of governmental agents (regulators, inspectors, tax auditors, police, prosecutors) to detect and to sanction violators of legal rules. The theoretical core of the analysis addresses the following basic questions: Should the form of the sanction imposed on a liable party be a fine, an imprisonment term, or a combination of the two? Should the rule of liability be strict or fault-based? If violators are caught only with a probability, how should the level of the sanction be adjusted? How much of society's resources should be devoted to apprehending violators? A variety of extensions of the central theory are then examined, including: activity level; errors; the costs of imposing fines; general enforcement; marginal deterrence; the principal-agent relationship; settlements; self-reporting; repeat offenders; imperfect knowledge about the probability and magnitude of sanctions; corruption; incapacitation; costly observation of wealth; social norms; and the fairness of sanctions.

The major theme of this article is that the interpretation of contracts is in the interests of contracting parties. The general reasons are (a) that interpretation may improve on otherwise imperfect contracts; and (b) that the prospect of interpretation allows parties to write simpler contracts and thus to conserve on contracting effort. A method of interpretation is defined as a function whose argument is the written contract and whose value is another contract, the interpreted contract, which is what actually governs the parties' joint enterprise. It is shown that interpretation is superior to enforcement of contracts as written, and the optimal method of interpretation is analyzed.

When would parties entering into a contract want performance to be specifically required, and when would they prefer payment of money damages to be the remedy for breach? This fundamental question is studied here and a novel answer is provided, based on a simple distinction between contracts to produce goods and contracts to convey property. Setting aside qualifications, the conclusion for breach of contracts to produce goods is that parties would tend to prefer the remedy of damages, essentially because of the problems that would be created under specific performance if production costs were high. In contrast, parties would often favor the remedy of specific performance for breach of contracts to convey property, in part because there can be no problems with production cost when property already exists. The conclusions reached shed light on the choices made between damages and specific performance under Anglo-American and civil law systems, and they also suggest the desirability of certain changes in our legal doctrine.

A solution to a broad category of nuisance suits is examined in this paper. The solution is to give defendants the option to have courts prevent settlements (by refusing to enforce them). Then, if a defendant knows he is facing a plaintiff who would not be willing to go to trial, the defendant would exercise his option to bar settlement, forcing the plaintiff to withdraw. And because the plaintiff would anticipate this, he would not bring his nuisance suit in the first place.