March 05, 2005
Efficient breach in China
The doctrine of "efficient breach" is one rooted in Justice Holmes's old notion that a contract is nothing more than an option, where the promisor may elect to perform or pay. That idea is not shared in some other legal systems. In a new article, A Case Study of Legal Transplant: The Possibility of Efficient Breach in China, Toronto's Ni Zhu takes a look at how one particular doctrine might be adapted in a very different regime. The abstract:
This article hypothetically places the theory of efficient breach in the context of Chinese society. Assuming that the Chinese lawmakers accept the idea of efficient breach and are willing to change the laws accordingly to carry out this idea, the article examines factors that may influence the viability of efficient breach as a legal transplant in China. It seeks to particularize the relevant context in which the theory of efficient breach as a legal transplant is embedded. Elements of the relevant context include: the social attitude on litigation, the availability of information, the competence of the judiciary, and the traits of judicial practice in granting contractual remedies. It shows that even if lawmakers are willing to make every change in rules to suite the theory of efficient breach, whether efficient breach-or-perform decisions can be made in practice and whether efficiency can be achieved through breach of contract depend on many factors external to the theory and legal rules designed accordingly.
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