Efi Zemach

In the face of powerful criticism, the "reliance interest" continues to hold an impactful position in judicial and academic treatment of contract damages. And yet, the theoretical foundation of reliance damages for breach of contract remains unsettled. This Article exposes the inability of the reliance scholarship to coherently explain and justify the widespread judicial practice of awarding reliance damages in lieu of expectation damages. Considering this resounding failure, the Article offers a hitherto overlooked promise-based conception of the reliance interest. Under reliance-as-promise, the right to be reimbursed for one's reasonably foreseeable performance costs is a secondary remedial right grounded in an implied contractual promise which the law attributes to every contracting party. When due to a total breach it becomes clear that the contract will not be performed, the background duty to reimburse comes into play. The Article presents and develops this promise-based account. It claims that reliance as promise can provide a more coherent normative and explanatory account of the phenomenon of awarding reliance damages for breach of contract. Apart from its explanatory force, and the normative support it can find in major contract theories, reliance as promise finds support in basic psychological insights and in the findings of a preliminary empirical study conducted by the authors.

Contract theory aims to explain and to justify contract law using different normative principles. This article argues that, at least within contract law, theory is not only intellectually stimulating but also holds a practical importance. This is because contract theory can be used as a methodology to produce a coherent interpretation of contract doctrine, which contributes to a deeper understanding of case law and rulings in this field. To demonstrate this approach, the article analyzes the recent Supreme Court decision in the case of Bibi Kvishim, in which the different justices offered contrasting approaches regarding interpretation of contracts, therefore stirring some confusion as to whether this decision deviates from the famous Aprofim ruling. The article first introduces Bibi Kvishim and examines its theoretical basis vis-à-vis other recent rulings in contract law. The theoretical analysis of Bibi Kvishim ruling is based upon diverse theories, e.g. the will theory, autonomy, economic efficiency, neo-formalism, theories that based on perceptions of fairness and reasonableness, and pluralistic theories. The article argues that it is a mistake to view the Bibi Kvishim ruling only through a doctrinal perspective, and completely disregard its theoretical qualities; in order to reach a deeper understanding of this ruling and its most important aspects, it should be viewed through the lens of contract theories.

It is widely agreed that no theory of contract is fully adequate—all theories face formidable descriptive, normative and conceptual difficulties. Why has contract scholarship failed to produce an acceptable theory of contract law, even after several decades of nuanced and sophisticated theoretical efforts? This Article answers this puzzle by offering a novel meta-theory of contract scholarship that focuses on the aesthetics of various contract theories. An aesthetic commitment, under this understanding, is a pre-theoretical presupposition regarding the form (as opposed to the substance) of legal discourse. The article argues that jurists harbor several different aesthetics and often employ them interchangeably and without noticing. The continuing struggle between different contract theories is isomorphous to the battle of aesthetics that rages in the legal community as a whole. Since there is no meta-aesthetic way to determine which aesthetic construction is correct, contract theories, which are based on different aesthetics, are destined to continue struggling indefinitely. The article explores four leading contract theories—promissory, reliance, economic and pluralistic conceptions of contract—and illustrates the manner each theory’s substantive insights are interwoven with aesthetics commitments, animating and giving the theories their unique character. In so doing, the article shows how the aesthetic point-of-view can better explain these theories’ specific strengths, weaknesses and disagreements, and it grounds its prediction that contract scholarship is not likely to produce a widely accepted theory any time soon.