The theory of efficient breach states that it is socially useful to breach a contract whenever the breach would leave no party worse off, while leaving at least one party better off. In other words, economic analyses of breach are mainly concerned with situations in which breach is Pareto-superior, rather than just overall profit-maximizing. In contrast with moral theories that hold that breach of contract is morally wrong insofar as it requires one party to break a promise, the economic view regards the contractual obligation as an obligation either to perform or to pay damages in an amount equal to the expected benefit of performance. It is generally accepted that a promisor is under both a moral and a legal obligation to perform a bargain promise. However, the theory of efficient breach-which is widely accepted in law and economics, and has obtained a toehold in mainstream legal sources-takes the position that breach is acceptable, and indeed should be encouraged by contract law, where the promisor’s gains from breach exceed the promisee’s losses.

Introduction: Economic analysis of contractual compensation is amongst the topics, which have been paid attention by the legal and economic scholars. The root of such a serious attention is the conflict of various goals and philosophies of enactment of the contractual compensation rules. In an economic perspective, the objective of establishment of compensation rules is to compensate for the loss sustained by the injured party rather than to punish the party in breach. This approach will lead to optional performance of contract, i. e. a free choice between compensation and specific performance. The outcome of such an approach will be that any obligor in any contract may breach the contract and pay a compensation for it. Those believing in advantages of further stipulation of moral principles in the Contract Law however do not go with this view. Infringement of contract may take place for the purpose of making more profit or avoiding further loss. By studying the types of efficient breach of contract – even in a traditional view to the Contract Law – this logical conclusion can be reached that some types of infringement of contract are in no contradiction with the spirit of justice and moral principles. Founded on economic analysis, mere performance of contractual obligations is not considered as the subject of a contractual relation, but contractual obligations are considered subject to efficiency and utility. Therefore, the replacement for specific performance that is contractual compensation may be the subject of contract and a desirable one. Methodology: Methodology of justification of the “ Theory of efficient breach” is based on the laboratory method. The justification is carried out on the basis of some certain and evidentiary data, gathered through studies and reviews in relevant areas. It’ s, however, obvious that stating a legal theory, without comprehensive knowledge of social phenomena is impossible. Therefore, for the purpose of this research, we kept our eyes on legal and economic phenomena, getting organized in front of us. Results & Discussion: Microeconomics, reviews the responses and reactions of the economic players to various factors and motives, and thereby determines which factors will lead to profitable and gainful outcomes. This eventually and consequently enhances the social wealth. In this regard, and in the economic attitude, there is an approach, known as “ homo economic us” , on the basis of which, economic players have a stable and orderly list of preferences, which they reasonably select in order to maximize profit, and determinedly seek their personal interests. This means it’ s assumed that the individuals are wise, and act in a way that will result in reduction of costs and increment of profit. And in case of increment of costs, they select – from the available options – which will cost them less. Hence, “ homo economic us” approach and a logical player won’ t, in the economist pattern, let the personal feelings stop a wealth-making transaction. Therefore, no specific and strong interpretation is required for “ rationality” for the purpose of justification of this essential prediction of economics, which is simply saying: “ the more costly, risky and difficult an option, the less will such an option be picked” . One of the legal institutions, which distinguishably offers a suitable ground for application of economic analysis, with regard to occurrence of economic and profit-seeking aspects, is contract. In economic analysis of contract law, a variety of issues of the contracts are reviewed and studied, but one of the subjects, which strongly attracted the attention of thinkers of both legal and economic areas, is ‘ contractual damages’ . Maybe the reason for such attention can be traced back in the answer to the question that what is the goal and philosophy of the damages in the contract law essentially. Taking into consideration the principle of necessity, the main and initial goal of all legal systems in the area of contract law, is enforcement of contract. In other words, it can be said that by formulating the rules and regulations on compensations, the legislator aimed originally at codifying a guarantee for compliance with and enforcement of contracts. Thus, since the necessity principle of contracts and liabilities has, in all legal systems, been accepted as an obvious principle, it can be stated that the initial objective of guarantees is to prevent breaking the promises and to implement the provisions of the contracts. The second function of contractual damages is that in case of violation of the contract, the promisor should recompense the promise's loss, and place the promise in the situation as if the contract has been executed. Then, from a traditional point of view, the objective of formulation of contractual damages, is to punish the party who has violated the contract, in such a manner that the promisor will be obligated to perform the contractual liabilities, because according to the moral approach, contract is a moral promise, therefore, violation of a contract is considered as a moral fault. In this respect, formulation of contractual damages can hinder the breach of contract, which by nature is considered as a moral promise. On the other hand, based on the economic analysis of the law, which assumes the contract as a means to achieve economic efficiency and to promote the wealth, the aim of contractual damages, is to compensate the damages resulting from violation of the contract, rather than to obligate the promisor to perform his/her promise. Therefore, compensation as a remedy for loss is an adequate substitute for specific performance for the damaged party. So, generally either of the parties, having been fully sure of their net profit even after full compensation of the damages to the damaged party, may find withdrawal of the contract more profitable. On this basis, violation of contract might economically be profitable, and consequently encouraged by the law. Therefore, on the basis of economic analysis, whenever breach of contract can lead to more profit or to prevent further loss in comparison with keeping the promise, it should be supported and promoted by the contract law, because it’ s to the satisfaction of both promise, whose loss has fully been compensated, and promisor, who’ s gaining even more profit. But this thought is unjustifiable for and rejected by a moral approach, which considers the violation of contract as breaking a promise. Therefore, there is an evident incompatibility between moral-promissory and instrumental approaches towards the contract law with respect to breach of a contract. Conclusion and Suggestions: One of the conflicts of instrumental and moral approaches in relation to the contract law is that whether economic efficiency should be considered as a sole or prevailing goal in the contract law or such other goals as morality and justice – as traditional goals of law – should still be observed? In other words, which one is more desirable for the parties to a contract? Concentration on efficiency as a desire and goal in the law, has been paid attention by legal thinkers, especially the economists, and is of thorough and adequate acceptability. As a shortcut, however, it might be better to stop the arguments over whether the objective of law, particularly the law of contracts, should mostly be founded on economic efficiency or otherwise such goals as morality, justice and fairness; and instead to accept that there is no agreement in this regard. The law may, at the same time, be at the service of both: it can use the resources efficiently and serve the morality and justice as well. In this research, it was intended, while studying the contractual damages, to explain kinds of efficient breach of contract and to sort them – as a subject less gone over before; and to determine that in some cases of efficient breach, there is not necessarily any conflict between two mentioned objectives and goals; and instead in most cases, these two are compatible with each other, and what is an efficient economic solution, is in conformity with morality and justice as well. Moreover, in economic analysis of contractual damages, it is reviewed that whether the contractual liabilities are substantive in a contract solely, or such contractual liabilities may only be considered as peripheral to efficiency and desirability? Concentration on desirability and efficiency would have the advantage that instead of specific performance, a substitute i. e. contractual damages can be put in the place of the subject and substance of a contract as well.

Reason is the sole agreed upon evidence whose authority is generally accepted by all human and divine schools of thought. Therefore, what is in need of study in contract law is not whether reason and the practice of the sage are sources of law specially as regards remedies for the breach of contract but rather the issue is whether what is suggested as the rule of reason in the area of remedies is actually understood by reason.The author argues that the two theories of anticipatory breach and efficient breach that are accepted by many legal systems in the field of contract remedies, mitigation or reduction of damages, are achievements of human reason and established by practice of the sage and best evidenced by the current usage in commercial transactions.

breach of contract may occur by the fault of party in breach. There is a variety of degrees in contractual fault and the highest degree of fault is intentional one. The breach of contract is considered to be intentional when the party in breach calculates the financial costs and benefits of the breach and then decides not to perform his/her contractual obligations. The notion of intentional breach and its consequences are recognized in common law and civil law and also in some European instruments such as PECL and DCFR. The intentionality of breach is considered to be relevant in above jurisdictions and instruments. For example, in the case of intentional breach, common law courts allowed the specific performance. They sometimes refused to mitigate the amount of penalty clauses and to recognize the exemption clauses in favor of the breaching party. Also, in civil law jurisdictions the intentional breach works as an allowance for unforeseeable damages. The hypothesis of this contribution is that in the case of intentional breach, courts must take a stricter approach than the usual breach and they should seek to improve the position of the creditor in terms of accessing to contractual remedies.

One of the interesting subjects in the United Nations Convention on International Sale of Goods- 1980 (CISG), is the issue of anticipatory breach of contract. According to this theory, if after the conclusion of a contract it becomes appear that one of the parties may not fulfill a substantial part of his obligations, or a fundamental breach of the contract may occur from his part, then the other party is entitled to suspend performance of his obligations, or to terminate the contract.This paper will deal with the question of suspension or cancellation of a contract due to an anticipatory breach in CISG, English law, and the U.S. law. Then compatibility of the Iranian law, as it is standing now, with this theory shall be examined.

Due to the stochastic nature of wind energy, allocating an appropriate investment incentive for wind generation technology (WGT) is a complicated issue. We propose an improvement on the traditional incentive, known as capacity payment mechanism (CPM), to reward the wind generators based on their performance exogenously affected by the wind energy potential of the location where the turbines are installed, and therefore, lead the investments towards locations with more generation potential. In CPM, a part of investment cost of each generator is recovered through fixed payments. However, in our proposal, wind generators are rewarded according to dynamic forecasts of the wind energy potential of the wind farm where they are located. We use an auto-regressive moving average (ARMA) model to forecast the wind speed fluctuations in long-term while capturing the auto-correlation of wind velocity variation in consecutive time intervals. Using the system dynamics (SD) modelling approach a competitive electricity market is designed to examine the efficiency of the proposed incentive. Performing a simulation analysis, we conclude that while a fixed CPM for wind generation can decrease the loss of load durations and average prices in long-term, the proposed improvement can provide quite similar results more efficiently.

Specific Performance and Compensation are main remedies for breach of obligation. Different legal systems, dependent upon their philosophical, legal and ethical attitudes, gave different priority to one of them and used another as an exceptional or discretionary remedy. Economic analysis of law, with a consequential approach, shows an optimal mechanism of contractual remedies to give higher priority to one of them in accordance with the conditions of that assumption. However, economic analysis has another important function and shows legal systems with similar goals. They usually applied different ways to achieve these goals. Thus, effectiveness and convergence can be considered as two important results of economic analysis. This research emphasizing on specific performance argues the advantages of specific performance compared with the compensation to offers suggestions for the legal systems.

Numerous models have been developed in the past decades to explain the complicated earth dams' berach phenomena. These have included physical as well as mathematical and computer models. Among the more widely used dam breach computer models over decades is the breach model. It is based upon erosion and soil mechanics equations, hydraulic and sediment transport laws. The difficulty in gathering data motivates one to use other powerful methods. In this study a new method has been developed for prediction of peak breach outflow and breach time through Artificial Neural Networks (ANNs). Toward this end, synthetic breach parameters of about 115 dams were developed by breach model, and then employed to train and test the neural networks. The performance of the network model is investigated through a change of input parameters. A most efficient and global model for assessing a dam breach potential is presented. Later, the most significant input parameters affecting dam breach are investigated. Best results were found with back propagation neural network using multiple hidden layers. The most compatible structure for breach outflow prediction possesses the correlation coefficients of 0.992 and 0.909 for training and testing, respectively. As for breach time, a structure was obtained with the correlation coefficients of 0.993 and 0.884 for training and testing, respectively. A forecast study was performed for the case of Mollasadra Dam. Comparisons between the artificial neural network results and dam breach model were made, the results indicating that neural networks are appropriate for predicting dam breach parameters.

In the law of international contracts, the suspension right remedy due to the anticipatory breach of contract has been accepted based on multiple foundations. Under this right, the creditor who, before the due date of fulfillment of obligation has, reasonably, concluded that the debtor, for any reason, would not perform their obligation, has the option to suspend his obligation according to the objective aspects criterion and after considering all surrounding circumstances of the case. In this paper, through a comparative approach in the Vienna Convention, its jurisprudential and Usuli feasibility in Islamic law will be studied and while presenting the suggested bases, by resorting to the rule of existence premise (moghaddameh vojoudieh) and the rules and issues originated from it such as rational, subordinate and annihilatory premises (moghaddameh mofavveteh), the main discussed issue (execution of the right to suspend in anticipatory breach) and the disputed actual breach may be proven so that the status of this remedy is established and strengthened in the Iranian Civil Code.

Knowing of formation of a legal rule is an efficient way to recognizing and assessing of that rule. Anticipatory breach doctrine became apparent in Common Law when the court in Hochster versus De La Tour case (1980), hold that a party could breach an executor contract prior to the performance date and injured party entitle to sue at once. Before it, courts had made a negative answer to this matter and expressly had denied it. Courts argument was that it is impossible to make a sentence before having a subject. But, refusing to accept repudiation, with certainty of future beach, would mean the waste of economic opportunities and remaining parties idle and delayed.