The Yale Law Journal

VOLUME
120
2010-2011
NUMBER
4
January 2011
690-977
Article

Remedies On and Off Contract

Richard R.W. Brooks & Alexander Stremitzer

120 Yale L.J. 690 (2011). 

Liberal allowance of rescission followed by restitution has, for centuries, unsettled legal authorities who fear it as a threat to commercial order or other normative values. Responding to these fears, authorities have limited the ease with which rescission may be elected. Their responses, however, are often excessive and based on misunderstandings of the remedy’s effects. Rescission, followed by restitution, may in fact promote contracting by allowing parties to create efficient incentives. Concern about the stability of contracting is not entirely unfounded, but the problem is not primarily due to the ease of rescission following breach; rather, the problem concerns the remedy that follows rescission. This Article presents an argument for liberal rescission followed by limited ensuing remedies. Modern reforms and proposals seem to embrace the opposite route, restricting access to rescission while, at times, allowing for generous ensuing remedies. These reforms and proposals, we show, are the real threat to contractual stability.