For one brief moment in time in 2022, to some it looked as though a Delaware judge was poised to order Elon Musk to purchase Twitter, over his objections, due to a contract breach. Had that happened, as Tess Wilkinson-Ryan (Penn) et al. note in Expecting Specific Performance, it would have been "the highest-profile specific performance order in living memory."
The incident helped prompt Wilkinson-Ryan and colleagues to explore intuitions on specific performance through a series of mixed-method experiments. And what they find, on balance, are "fragile" intuitions. Levering a mix of survey and experimental data, the authors find that "ordinary people think that courts will give them exactly what they bargained for after breach of contract; in other words, specific performance is the expected contractual remedy." They go on to argue that "the default expectation of equitable relief is a widespread but malleable intuition—and that even a fragile legal intuition has practical consequences, individually and systemically." Indeed, updating subjects with the prospect of money damages for a contract breach loosens initial default expectations for specific performance. The paper's abstract follows.
“Using a series of surveys and experiments, we find that ordinary people think that courts will give them exactly what they bargained for after breach of contract; in other words, specific performance is the expected contractual remedy. This expectation is widespread even for the diverse array of deals where the legal remedy is traditionally limited to money damages. But for a significant fraction of people, the focus on equity seems to be a naïve belief that is open to updating. In the studies reported here, individuals were less likely to anticipate specific performance when they were briefly introduced to the possibility that courts sometimes award damages in contract disputes.
We argue that the default expectation of equitable relief is a widespread but malleable intuition—and that even a fragile legal intuition has practical consequences, individually and systemically. In a follow-up experiment, we show that subjects are more interested in the prospect of efficient breach when they know that money damages are a possible remedy. This finding suggests that the mismatch between what people assume the law will do (specific performance) and what it actually does (money damages) sometimes encourages performance. We consider the potential for exploitation of this tendency. Finally, we offer some suggestions about how law and psychologists should elicit folk beliefs about legal rules and remedies."
Comments