Foreword: Fault in American Contract Law

Authors

Omri Ben-Shahar, University of Chicago Law SchoolFollow
Ariel Porat, Tel Aviv UniversityFollow

Abstract

The basic rule of liability in tort law is fault. The basic rule of liability in contract law is no fault. This is perhaps one of the most striking divides within private law, the most important difference between the law of voluntary and nonvoluntary obligations. It is this fault line (speaking equivocally) that the present Symposium explores. Is it a real divide-two opposite branches of liability within private law-or is it merely a rhetorical myth? How can it be justified? As law-and-economics scholars, this fault/no-fault divide between contract and tort is all the more puzzling. In law and economics, legal rules are understood as incentives, evaluated within a framework in which parties take actions to prevent different types of loss. Tortfeasors can take measures to avoid accidents; contracting parties can take measures to avoid loss from breach. The context of the loss can diverge between contract and tortaccidents to strangers versus harm to a known breached-against party-but the underlying framework of incentives is similar, if not identical. Robert Cooter famously described this underlying framework as a unified "model of precaution," and Richard Craswell showed how to think of the breach-or-perform decision as a problem of precaution, mirroring the framework of tort law. Thus, to those of us who take the idea of a unified model seriously, a significant puzzle looms large: if these two branches of law share the same underlying framework, why do they follow different liability regimes?

Recommended Citation

Omri Ben-Shahar & Ariel Porat, Foreword: Fault in American Contract Law, 107 Mich. L. Rev. 1341 (2009).
Available at: https://repository.law.umich.edu/mlr/vol107/iss8/1