Contractual Remedies, Essay Example

In “Promises and Contracts”, T. M. Scanlon argues that performance and expectation damages “do not merely serve to deter promisors from breaching contract but also, in each of the cases in which they are applied, give promisees what they have wanted to be assured of (or come as close to doing that as is practically possible)” (110). I think that Scanlon’s account of contractual remedies is a good one, because he evaluates all of the key aspects that are most significant in regards to influencing the parties of the agreements and their outcomes. He specifically details the role the law plays in enforcing damages and remedies when the contract is not fulfilled, and he also assesses the difference between a traditional social promise and a contract.  The following takes a deeper look at Scanlon’s view on the role of contractual remedies and how they function.

Scanlon defines the actual law of contracts very similarly to promises in that they are both social institutions, but he defines a contract as a “social institution backed by the coercive power of the state and subject to modification through judicial decisions and legislative enactments” (Scanlon: 86). He identifies the two functions of the remedies applied within these contacts to be protecting the right of the promisee to have fare compensation and providing the promisor with alternative forms of action to assure the promisee is compensated. The reason Scanlon feels these are the functions remedies out to serve is that remedies should be a direct reflection of the choices made by both parties in the agreement, but also due to the fact that Scanlon believes even the most responsible individuals are prone to making mistakes or misjudgments so it is possible the promisor could fall short of meeting the agreement and need an alternative method of compensation. Beyond these remedies, Scanlon does note that there should be no secondary contract to establish what will happen with the initial agreement on the remedies are met. He argues damages and performance need to be enforced by the court. The main reason he takes the position that courts should enforce the damages has to do with the fact that Scanlon feels a contract drafted to enforce a contract that is not honored has even less chance of being honored. At some point, some form of  legal authority needs to step in to enforce the terms of a contract.

I agree with Scanlons view that the two functions of contractual remedies are to be used in protection of the promisee’s right to compensation and enforcement of the promisor’s consent to the agreement. The main reason I agree with this, has to do with the fact that Scanlon is essentially saying the considerations of remedies should not extend further beyond these functions, and the rest should be handled by the courts. I also agree with Scanlon’s view that in regards to contracts the expectation damages and specific performance are remedies specifically for the courts to enforce. He does however point out that these remedies must not be excessive “people need to make contracts, and they may fail to keep them. We are all prone to errors in judgment, some of us more than others, and even given ‘adequate opportunity to avoid the penalties for breach of contract, people will sometimes have to pay these penalties” (Scanlon:105). He defines an excessive remedy as one that is grossly overvalued in comparison to the initial intended action of the agreement. On the topic of what is considered excessive he specifically notes that a penalty that might be applied within a contract if the promisor fails to fulfill the expectations of the contract would be considered excessive if the two parties of the contract did not feel the penalty paralleled the cost of the contract as a whole.  On the topic of permissibility of remedies within a contract, specifically as it relates to payment for expectation damages, Scanlon notes that remedies for payment of expectation damages are permissible if the damages reasonably could have been foreseen at the time the contract was being drafted. He notes that the remedies must not be excessive, but this is a generally the case anyway as the remedies rarely are disproportionate to the cost of the benefits that would have been received if the contract had been fulfilled.

The main benefit remedies offer both parties is protection of expectation and an alternative form of action or compensation. Scanlon breaks down the structure of the contract by pointing out it brings three considerations to the table. “the interest of the promisors in being able to avoid an obligation by having an acceptable alternative course of action; the interest of the promisors in being able to make binding commitments in some cases even when they lack such alternatives; and the varying strength of the interests of the promisees in being able to rely on assurances they are given (Scanlon: 116). Scanlon notes that the most essential aspect of making the promise or contract binding is the “voluntariness” of the parties involved, but the remedies of a contract are legally enforceable by the state, so long as they are not excessive. This is how Scanlon emphasizes the value of choice revealing that the decision of both parties to enter into the agreement is what essentially gives the agreement its binding power. When the promisor gives his consent it creates expectation and obligation. Scanlon notes that, “if I am not going to drive you to work then it is better to warn you than not to do so, but even if I do this I am breaking a promise. The same can be said of compensation. If one fails to fulfill a promise, one should compensate the promisee if one can, but the obligation one undertakes when one makes a promise is an obligation to do the thing promised, not simply to do it or compensate the promisee accordingly” (Scanlon: 92). Scanlon argues that promises and contracts are based on a value that people place in the assurance of being able to count on an expected result. The author notes that one reason we need to be able to rely on what another person tells you about what they are going to do is that it allows the promisee to avoid loss that could potentially result from a decision one might make based on the information in the agreement or the lack thereof. In turn contractual remedies need to be sound because they provided additional assurance that one party can rely on the other in the contract, and finally the potential threat of legal intervention provides the final guarantee that the contract will come to a fare resolution.

Scanlon’s Circularity Objection takes the position that one party promises to do something based on something being done in return. Scanlon refers to Principal F to represent the obligation that occurs in contracts and promises. Scanlon believes that promises entail a diverse set of duties which deal with expectations, specifically in regards to what one intends to do or what actions they intend to take. Scanlon’s main argument is that promising enables one to gain cooperation in situations where social norms or standards might not bee enough to create obligation or achieve cooperation. Remedies in turn provide extra assurance that the intended expectations of the agreement will be met or similar to that affect.

In sum, the main argument Scanlon makes is that promises can be morally binding but the promissory obligation does not rely on social practices commonly attributed to agreement making. Scanlon points out that the contractualist framework signifies that promises and contracts both need voluntary action in order to be binding agreements. He refers to this as the value of choice. Essentially Scanlon is interpreting how contracts are needed for agreements or promises where both parties have much at stake and simple social norms are not enough to make the agreement binding. His view on remedies and damages is just in the fact that it’s one in which both parties are still voluntarily entering into an agreement based on expectations of outcomes they feel are adequate and appropriate for their intended action.

Work Cited

Scanlon, Thomas M. “Promises and contracts.” The Theory of Contract Law: New Essays 86 (2001): 92.