Michael Jackson's Law

Written Assignment

1. Was the breach efficient? How do you know?

Michael Jackson's breach of contract with the concert promoter was efficient by economic standards. As an economist, one believes all people are rational, therefore one can assume that Michael Jackson valued his time on New Years Day more than the 21 million dollars that he would have to pay in expectation damages for breach of the contract. So as a rational human, Michael Jackson would not want to incur an loss and choose to cancel the performances in order to maximize his economic gain, as his time not performing was worth more than the breach of contract. Thus, Michael Jackson violation of his contract was an efficient breach.

2. Are expectation damages here a form of application of the liability rule? Explain.

The expectation damages Michael Jackson would have to pay for breach of contract is a liability rule. Expectation damages are a retribution for a breach in contract. Liability rules are a collaborative settlement of the value of an entitlement or right. In Michael Jacksons case the contract made by Jackson, and the concert promoter had a clause that explicitly stated that a breach in contract would result in a payment for damages incurred, namely 21 million dollars, in promoting, profit, and debt.

3. Are lost profits a good example of expectation damages in this case?

Yes, lost profits are an example of expectation damages because concert tickets sold must be refunded breach of contract. Because additional consequential damages were