Contract Breaches and the Criminal/Civil Divide: An Inter-Common Law Analysis

Abstract

Scholars have long debated why certain common law breaches in American jurisprudence receive criminal punishment (imprisonment) while others only receive civil sanctions (monetary damages). Scholars like Richard Posner and Guido Calabresi have used economic-based models and the notion of efficiency to explain why torts only receive civil sanctions but crimes receive criminal punishment. Others like John Coffee and Paul Robinson have questioned the explanatory power of these models. Instead, they have focused on the moral difference between torts and crimes. Simply put, a crime’s intentional nature makes it morally worse than the carelessness typified by tortious activity. Interestingly, scholars on both sides of the debate have largely neglected to include contract breaches - a significant part of common law - into their models. Like torts, these breaches also only receive civil sanctions. What explains the similar treatment? This Article makes an original contribution to the literature by systematically introducing contract breaches into the broader criminal/civil debate. It employs the aforementioned economic and moral-based models in an effort to understand the treatment of contract breaches. The economic model, and its focus on efficiency, predictably explains why these breaches only receive civil sanctions. The moral-based model stumbles here. Its focus on intent suggests that a contract breach - as intentional conduct - also deserves moral blame and thus criminal punishment. What is missing from this model is recognizing the unique nature of the underlying responsibility in a contract breach and specifically the difference between a “voluntary obligation” and a “non-voluntary obligation.” This Article takes the innovative step of introducing this distinction into the larger criminal/civil debate and using it to conclude that the moral-based and economic approaches can be integrated into a unified model.