no such encouragement, and may lead to a wasteful use of resources by the claimant. Linked to this is the economic notion of an efficient breach of contract which is based on the assumption that if a third party values a commodity more highly than the claimant, the defendant may be justified in selling to the third party instead of to the claimant, thereby producing an efficient breach. To enforce literally the contract between the claimant and the defendant would produce a contract at an undervalue, which would not be economically sensible. In this case, the higher value received from the third party could be used to fund an award of damages paid to the claimant and all parties concerned will be better off in the end. A further argument is that in the absence of transaction costs, it does not matter what legal rights and remedies are available, because the parties, as rational maximisers of value, will negotiate around them to produce the most efficient result. On this analysis, if a third party values goods more highly than the claimant, the defendant will negotiate with the claimant to be released from his or her obligation to comply with an order for specific performance by offering to pay to the claimant some of the extra profit to be made from selling to the third party. Of course, this approach does not take account of transaction costs such as the time and expenditure involved in these negotiations. Finally, it is probably understandable that the courts have been reluctant to extend the scope of specific performance too far, given that disobedience of such an order amounts to a contempt of court, which is potentially punishable by imprisonment. There is an element of wishing to avoid the use of a ‘sledgehammer to crack a nut’. By way of contrast, German law starts with the principle that the ‘creditor’ is entitled to a judgment compelling performance (BGB, para 241) – an approach no doubt conditioned by the fact that ‘execution’ is usually against property rather than against the person. On the other hand, there are arguments in favour of compulsory performance. For example, it may support the morality of promise-keeping. Moreover, by compelling performance, it is possible to protect subjective expectations such as the consumer surplus value placed upon a commodity or a service over and above its market value. Also, where appropriate, specific performance can be used to prevent a person from making profits which might fall foul of the second principle of remoteness in Hadley v Baxendale.

DOI link for no such encouragement, and may lead to a wasteful use of resources by the claimant. Linked to this is the economic notion of an efficient breach of contract which is based on the assumption that if a third party values a commodity more highly than the claimant, the defendant may be justified in selling to the third party instead of to the claimant, thereby producing an efficient breach. To enforce literally the contract between the claimant and the defendant would produce a contract at an undervalue, which would not be economically sensible. In this case, the higher value received from the third party could be used to fund an award of damages paid to the claimant and all parties concerned will be better off in the end. A further argument is that in the absence of transaction costs, it does not matter what legal rights and remedies are available, because the parties, as rational maximisers of value, will negotiate around them to produce the most efficient result. On this analysis, if a third party values goods more highly than the claimant, the defendant will negotiate with the claimant to be released from his or her obligation to comply with an order for specific performance by offering to pay to the claimant some of the extra profit to be made from selling to the third party. Of course, this approach does not take account of transaction costs such as the time and expenditure involved in these negotiations. Finally, it is probably understandable that the courts have been reluctant to extend the scope of specific performance too far, given that disobedience of such an order amounts to a contempt of court, which is potentially punishable by imprisonment. There is an element of wishing to avoid the use of a ‘sledgehammer to crack a nut’. By way of contrast, German law starts with the principle that the ‘creditor’ is entitled to a judgment compelling performance (BGB, para 241) – an approach no doubt conditioned by the fact that ‘execution’ is usually against property rather than against the person. On the other hand, there are arguments in favour of compulsory performance. For example, it may support the morality of promise-keeping. Moreover, by compelling performance, it is possible to protect subjective expectations such as the consumer surplus value placed upon a commodity or a service over and above its market value. Also, where appropriate, specific performance can be used to prevent a person from making profits which might fall foul of the second principle of remoteness in Hadley v Baxendale.

no such encouragement, and may lead to a wasteful use of resources by the claimant. Linked to this is the economic notion of an efficient breach of contract which is based on the assumption that if a third party values a commodity more highly than the claimant, the defendant may be justified in selling to the third party instead of to the claimant, thereby producing an efficient breach. To enforce literally the contract between the claimant and the defendant would produce a contract at an undervalue, which would not be economically sensible. In this case, the higher value received from the third party could be used to fund an award of damages paid to the claimant and all parties concerned will be better off in the end. A further argument is that in the absence of transaction costs, it does not matter what legal rights and remedies are available, because the parties, as rational maximisers of value, will negotiate around them to produce the most efficient result. On this analysis, if a third party values goods more highly than the claimant, the defendant will negotiate with the claimant to be released from his or her obligation to comply with an order for specific performance by offering to pay to the claimant some of the extra profit to be made from selling to the third party. Of course, this approach does not take account of transaction costs such as the time and expenditure involved in these negotiations. Finally, it is probably understandable that the courts have been reluctant to extend the scope of specific performance too far, given that disobedience of such an order amounts to a contempt of court, which is potentially punishable by imprisonment. There is an element of wishing to avoid the use of a ‘sledgehammer to crack a nut’. By way of contrast, German law starts with the principle that the ‘creditor’ is entitled to a judgment compelling performance (BGB, para 241) – an approach no doubt conditioned by the fact that ‘execution’ is usually against property rather than against the person. On the other hand, there are arguments in favour of compulsory performance. For example, it may support the morality of promise-keeping. Moreover, by compelling performance, it is possible to protect subjective expectations such as the consumer surplus value placed upon a commodity or a service over and above its market value. Also, where appropriate, specific performance can be used to prevent a person from making profits which might fall foul of the second principle of remoteness in Hadley v Baxendale.