The Expectation Measure and Its Discontents

INTRODUCTION 2 I. THE INDIFFERENCE PRINCIPLE AND THE EXPECTATION MEASURE ......... 3 A. Efficient Rate of Performance by Promisors 3 B. Efficient Rate of Precaution by Promisors .4 C. Surplus-Enhancing Reliance by Promisees .4 D. Faimess 5 II. CRITIQUES OF THE EXPECTATION MEASURE THAT AIM TO BETTER IMPLEMENT THE INDIFFERENCE PRINCIPLE 6 A. The Theory of Overreliance 6 1. Cases in Which Overreliance Is Impossible 7 2. Cases in Which Overreliance, Although Possible, Is Very Unlikely to Occur 9 a. Lumpy Reliance 9 b. Coordinated Contracts 1 0 c. Highly Limited Insurance 10 3. The Extreme Difficulty of Administering the Theory 12 B. Adjusting for Enforcement Errors 13 1. Enforcement Errors in Contract Law and the Subjective Beliefs of Promisors 14 2. Objective Probabilities and Objective Evidence About Subjective Probabilities 15 3. The Elusiveness of Objective Probabilities and Objective Evidence About Subjective Probabilities in Contract Cases 16 4. Other Administrative Concerns in Enhancing Contract Damages by Adjusting for Enforcement Errors ...... 18 C. Taking into Account the Secrecy Interest 19 III. CRITIQUES OF THE EXPECTATION MEASURE THAT REST ON ALTERNATIVE GOALS FOR REMEDIAL REGIMES IN CONTRACT LAw 23