DISGORGEMENT DAMAGES FOR BREACH OF CONTRACT
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Abstract
Gain-based damages for breach of contract are often viewed as anomalous, and lacking a clear rational basis. This article seeks to provide a theoretical basis for the requirement to disgorge profits gained through breach of contract. By looking at the core contractual obligation, it can be seen that a contracting party has two ways in which they can fulfil their promises. They can pay damages where they fully compensate the other party, or they can perform. Where damages are inadequate, the contracting party must perform. Failure to perform in such circumstances should be prevented, and it is argued that disgorgement of profits is a suitable deterrent to such contract breakers. It is suggested that the law should act in this way to protect the facilitative institution of contract.
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