An Economic Analysis of Buyer's Breach: A Comment

Samuel Rea

Canadian Journal of Economics, 1989, vol. 22, issue 4, 904-09

Abstract: This paper examines legal remedies for breach of a contract to buy from a monopolistic seller. Rational parties will prefer lost profits damages for buyer breach. The lost profits can be measured as the contract price minus the costs not yet incurred minus the seller's value of the unsold goods at the time of breach. If the buyer prefers to resell the goods in the market despite the resale cost, the monopolistic seller will prefer to breach and pay lost profits damages. The law tends to provide the remedies that would be included in efficient contracts.

Date: 1989
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