- Elgar original reference
Edited by Jan M. Smits
Chapter 60: Remedies for breach of contract*
According to the basic rule of contract law, common to all contemporary legal systems, pacta sunt servanda (Watson, 2001, p. 40); indeed, it is a fundamental prerequisite of market-based societies that, even in purely consensual contracts, the reciprocal promises and rules agreed upon by the parties are to be treated as legally binding rules governing the relationship between those parties (Frignani and Torsello, 2010, p. 3). In fact, in the simplest legal system one could theoretically think of, that basic principle could be regarded as the only necessary substantive mandatory rule, any other contractual settings being left to the freedom of contract of the parties (Shiffrin, 2007, p. 709). Even in such an oversimplified contract law system, however, the question would still need to be addressed as to what consequences derive from the breach of that fundamental rule; i.e., what legal tools are made available to the aggrieved party to react to (or possibly to prevent and avoid) the detrimental consequences stemming from the default of the breaching party in a contractual relationship. The remedial system in contract law, therefore, may be regarded as the bundle of legal tools available to the aggrieved party to react against the non-compliance by the other party with its contractual obligations, thus making the aggrieved party’s contractual rights enforceable (Friedmann, 2005, p. 10). Any legal system which aims at governing contracts cannot overlook the need for remedies, although the comparison of different legal systems shows that the tools made available to the aggrieved party may differ in various respects.
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