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market-based damages is likely to be the true expectation measure, and a court would find it difficult to calculate the true expectation award because the idiosyncratic value to Kent of Reading brand pipe has no ready referent. (The added cost, prior to enclosure, of the Reading pipe would seem a minimum award but would not necessarily fully compensate Kent for his idiosyncratic value because, after the walls are closed, this added cost is insufficient to pay for the installation of the preferred pipe.)

In a case such as this, if a damages award of some amount is the only available remedy, cost-of-completion damages are attractive even though they would be overcompensatory, particularly if the promisor intentionally tendered defective performance. As observed by Steve Thel and Peter Siegelman in work that builds on Cohen’s earlier contribution, anticipation of a cost-of- completion award under these circumstances could prevent promisor breach that would be inefficiently encouraged were the lower, market-based measure employed.28 Bob Scott and Alan Schwartz have observed that courts often decline to award the higher remedy despite promisor fault.29 But even if a court would apply a willfulness label to this case and award cost-of-comple- tion damages, the reason need not be a desire to award supracompensatory damages or to deny any sort of good-behavior discount. For better or for worse, were they calculable,30 a court might still prefer merely compensatory expectation damages.

Conclusion

Th e iconic cases discussed here – Jacob & Youngs, Groves, and Peevyhouse – display the work of judges who use “willfulness” of breach as a way to signal their determination that a promisee has suffered substantial harm from a promisor’s failure to perform. Fault seems not to be truly part of the judges’ willfulness conception and punishment seems not to be part of their goal. Rather these judges use the esoteric legal term of willfulness in a mundane process: the calculation of expectation damages. In a sense, the courts are following the path prescribed by Dick Craswell, who warns that when a court

28See Thel & Siegelman, supra note 20; Cohen, supra note 7. See also Muris, supra note 20.

29See Robert E. Scott, In (Partial) Defense of Strict Liability in Contract, this volume; Robert E. Scott & Alan Schwartz, Market Damages, Efficient Contracting, and the Economic Waste Fallacy, 108 Colum. L. Rev. 1610 (2008).

30An ambitious court might seek to determine the true value the promisee places on performance through a structured settlement process imposed on the parties. See Ayres & Madison supra note 27. Or a court might find reason to replace a determination of such value with an award based on the bargaining power of the parties. See Omri Ben-Shahar, A Bargaining Power Theory of Default Rules, 109 Colum. L. Rev. 396 (2009). But these interesting ideas are beyond the scope of this essay.

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applies strict liability to a determination of willfulness – that is, when willfulness is not fault based – the court should carefully measure the damages award yielded by such a determination, lest the rule create inefficient incentives.31 In these cases, the courts are, to the best of their abilities, carefully measuring damages, as part of the standard expectation remedy.

Th is is not to say that other willful breach theories are mistaken. In some cases, for example, it may well be sensible to adjust damages or to apply a penalty, as deterrence, for instance – ideas proposed by Cohen, Thel and Siegleman, and Bar-Gill and Ben-Shahar.32 Or one might believe that certain breaches should be met with a particular imposition of damages based on the promisor’s immorality.33 And the case law may well offer examples of courts that adopt these approaches. But the best-known building, grading, and mining contractor cases, the standard set of exemplars for the supposed willful breach penalty, have another explanation.

31See Craswell, supra note 7.

32See supra notes 9, 10, and 28 and accompanying text. These approaches contemplate selective application of the willfulness doctrine. In contrast, Bob Scott and Alan Schwartz have proposed that to induce precaution and provide restitution, cost-of-completion damages should be awarded routinely, without regard to possible overcompensation. See Scott & Schwartz, supra note 29. George Cohen also addresses the role of restitution in these cases; see Cohen, supra note 7, a topic beyond the scope of this chapter.

33For a recent debate on questions of fault and morality in contract law, compare Seana Shiffrin, Could Breach of Contract Be Immoral?, 107 Mich. L. Rev. 1551 (2009), and Steven Shavell, Why Breach of Contract May Not Be Immoral Given the Incompleteness of Contracts, this volume. The morality of breach is a separate question from that presented by fraudulent promises. Regarding the latter, see, Ian Ayres & Gregory Klass, Insincere Promises: The Law of Misrepresented Intent

(2005). An analysis of either question is beyond the scope of this chapter.

Part V

COMPARATIVE FAULT