Efficient Breach of Contract from the Perspective of Law and Economics: A Study of U.S. Experience and Implications for Vietnam

Contractual relationships are increasingly influenced by market volatility and rapid changes in economic value. This reality calls for a reconsideration of contract breaches not only from a legal and moral perspective but also from an economic standpoint. The doctrine of efficient breach of contract argues that, in certain circumstances, breaching a contract may lead to a more efficient allocation of social resources, provided that the breaching party fully compensates the non-breaching party for their expected benefits. This article aims to clarify the theoretical foundations, practical significance, and ongoing debates surrounding the doctrine of efficient breach, while assessing its applicability within the Vietnamese legal context. The study employs analytical and synthetic methods, comparative legal analysis between Vietnamese and U.S. law, case law analysis, and a law-and-economics approach. The findings indicate that U.S. law has recognized efficient breach to a certain extent through the mechanism of expectation damages and the limited application of specific performance in cases where the cost of performance is disproportionately high. By comparing this approach with the current state of Vietnamese law, the article proposes several controlled applications of the efficient breach doctrine to strike a balance between the principle of honoring contractual commitments and the goal of enhancing overall socio-economic efficiency.