8/12/2019 Abstract (Sage) - Compensation & the Common Law

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CO LUMBIA UNIVERSITYI N T H E C I T Y O F N E W Y O R K

L A W S C H O OL

Nicholas W. SageAssociate-in-Law, Postdoctoral Fellow

& Lecturer in Law

212.854.1608nsage@law.columbia.edu

law.columbia.edu/fac/Nicholas_Sage

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Jerome L. Greene Hall 435 West 116th Street New York, NY 10027

ABSTRACT:COMPENSATION IN CONTRACT AND PROPERTY (WORKING TITLE)

COMPENSATION AND THE COMMON LAW CONFERENCEUNIVERSIT DE MONTRAL,MARCH 21,2014

One fundamental aspect of contract law that theorists seek to explain is why, in the eventof breach, a contractual promisee is generally entitled to compensation in the form of an awardof specific performance or its equivalent in damages.

An increasingly popular explanation holds that, at contract formation, a promiseeacquires a right to the subject-matter of the parties contract: a right to the good or service orother thing that is promised.1On this view, a contract right is just like a property right, exceptthat the subject-matter of a contract right may include future actions or other things that do notyet exist. And on this view, it seems to make sense that in the event of a breach the promisee cansue for compensation in the form of an order that the promisor provide the contractual subject-matter (i.e., specific performance) or its equivalent in damages.

I contend, however, that this proprietary explanation for contractual compensation isproblematic. It explains neither whois liable to provide compensation for breach of contract, norhowthey become liable. That is, the proprietary explanation cannot account for the contractualdoctrines of privity or strict liability. I argue that if, at contract formation, a promisee simplyacquires the subject-matter of the contract, then everyone in the world, and not just the promisor,

should be equally liable for the deprivation of that subject-matter from the promisee throughnonperformance. Furthermore, given that liability for interference with true property rights oftenrequires negligence, the proprietary explanation of contract cannot account for why a contractualpromisor is strictly liable to provide compensationirrespective of fault.

The solution to these problems about contractual compensation, I suggest, is to view thecontractual promisee as acquiring a right at formation, not over the subject-matter of the contract,but over thepromisors choice to provide the subject-matter of the contract. This subtledifference enables us to explain who becomes liable, in the first instance, to providecompensation for breach of contract: the promisor. It also, I will argue, provides a basis forholding the promisor strictlyliable. Finally, I also suggest that this approach provides a

theoretical foundation for many differences in compensatory treatment traditionally afforded to,respectively, property and contract rights, rights in rem and rights in personam, andnegative and positive obligations.

1E.g. RANDY E.BARNETT,CONTRACTS(2010); Andrew Gold,A Property Theory of Contract, 103 NW.U.L.REV. 1(2009); Peter Benson, Contract as a Transfer of Ownership, 48 WM.&MARY L.REV.1673 (2007).