On Efficiency Breach In American Contract Law

The theory of efficient breach is a breach of contract theory proposed by the U.S Justice Richard A. Posner, the representative of Economic Analysis of Law faction. This theory is from the cost savings, efficiency-seeking perspective, consider the interest gained from breach of contract if the other party to perform beyond his expectation interests, and such damages is limited to the expected benefits, then this situation will form an incentive for breach of contract, the parties should default. Economic analysis of law faction through the cost and risk analysis of the relationship between the transaction process to re-evaluate the function and value of the underlying contract obligations, this theory has its own value, but there are some natural defects. Although the theory of efficiency from economic field is introduced into the field of contract law made up for the inadequacy of pure legal analysis method, but often not efficiency, efficient breach is neither completely to make up for the loss of the observant party there is also a moral legitimacy.As can be seen from some of the jurisprudence of the United States, there are legal system and rules exist support for the theory. By comparing the differences in the legal environment of the two countries concluded that efficient breach theory is not suitable for China, should not be adopted by the Chinese Contract Law.