Tuesday, December 12, 2006
The latest issue of the Michigan Law Review (the picture at left is not the latest issue) sports Melvin Eisenberg's "The Disgorgement Interest in Contract Law." Do you remember the scene from Steve Martin's The Jerk when the new phonebooks arrive and Steve Martin gets terribly excited? That scene approximates my joy at discovering a new article by Eisenberg. For some reason, this one did not first circulate on SSRN, so it is a happy surprise. An edited version of the abstract appears below:
Restatement Second of Contracts provided that contract law serves to protect one or more of three interests: the expectation interest, the reliance interest, and the restitution interest. There is, however, a fourth interest that contract law should and does protect: the disgorgement interest, which is the promisee's interest in requiring the promisor to disgorge a gain that was made possible by the promisor's breach, but did not consist of a benefit conferred on the promisor by the promisee. It is not clear why the Restatement Second excluded the disgorgement interest. Perhaps the drafters believed that this position was compelled by positive law. That proposition, however, would have been doubtful even when Restatement Second was published ,and it is clearly wrong today: . . . Alternatively, the drafters of Restatement Second may have believed that the disgorgement interest should not be protected as a normative matter. That proposition also cannot be supproted. On the contrary, there are strong efficiency reasons, as well as moral reasons, for protecting the disgorgement interest, because in certain categories of cases, protection of that interest in contract law is necessary to provide efficient incentives ot the promisor, to effectuate contracts., or to prevent unjust enrichment. . . .
The citation for the article is 105 Mich. L. Rev. 559 (2006)