Tom Stilp JD, MBA/MM, LLM, MSC
We are doing a study at the University of Florida as to the factors that go into decisions to breach contracts. A few interesting points on breach of contract cases:
- Cook County had almost 523,000 new cases filed, of which 15,000 were filed in the Law Division for breach of contract / business disputes. (Annual Report Administrative Summary of the Illinois Court 2022)
- Apart from state courts, the U. S. District Court had 26,000 new breach of contract cases filed in 2022. (https://www.uscourts.gov/statistics)
Why do we have contracts? Contracts order economic activity and facilitate exchange. Contracts shift risk and create gain-sharing rules between the parties.
Given the thousands of contract cases each year, it is not a question whether contracts should be breached (they are), but what to do about it? We are studying whether we can identify the conditions that would make the decision to breach economically efficient. In other words, when is it better to breach an agreement rather than continue to perform under that agreement?
Niccolo Machiavelli, in The Prince (1513), advised that it is better to break an agreement when the circumstances that made the parties bind themselves no longer exist and continued adherence to the agreement would be against self-interest. In summary, here is some other advice Machiavelli offered (in today’s language):
- Breach agreements when in your self-interest
- Be present
- Be careful who you trust
- Learn from the best
- Be picky about who works for you
- Prepare for the worst (centuries later Zig Ziglar famously said: “Expect the best.Prepare for the worst. Capitalize on what comes.”)
- Don’t be cruel
- Appearances matter
- Sometimes your enemies are your friends
- Avoid flatterers
We have litigated hundreds of contract cases over the years in state and federal courts.Our study will provide research to help business better understand breach of contract situations.
