Rethinking Contract Law and Contract Design

Rethinking Contract Law and Contract Design

Rethinking Law series

Victor P. Goldberg

Rethinking Contract Law and Contract Design presents a rich array of ideas that reassess the law and economics of contractual relations. Victor P. Goldberg uses a transactional framework to critically analyse and re-evaluate contract doctrine and specific legal cases. This important work examines particular contractual precepts whilst conducting a detailed exercise in legal archaeology, challenging readers to reconsider significant legal decisions by forensic exploration of records, briefs, and other materials, including the staple cases of textbooks and casebooks.

Chapter 12: After frustration: three cheers for Chandler v. Webster

Victor P. Goldberg

Subjects: economics and finance, law and economics, law - academic, commercial law, law and economics, law of obligations


Performance of a contract can be excused by a number of circumstances, notably impossibility, impracticability, and frustration. When performance is excused there remains the question of how to treat any payments or expenditures that were made prior to the occurrence of the contract-frustrating event. In Chandler v. Webster, the English courts decided over a century ago that the parties should be left where they were at the time of the frustrating event. Forty years later that holding was overturned so that now recovery might be had both for restitution of payments made prior to the event and for expenditures made in reliance on the contract. American law, as embodied in the Restatement (Second) of Contracts, has also favored restitution with some concern for reliance. Both the English and the American responses emphasize the injustice of the Chandler solution. This chapter argues that the English and American rules both got it wrong.

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