Of Boobs and Breaches

By Kevin Smith

For a glorious, fleeting period spanning late elementary school and the early teenage years, the stylish response whenever objections were voiced regarding one’s playground conduct was to invite litigation.

Well… kind of. But not really. While the response “Oh yeah? So sue me!” was thrown around with casual off-handedness, it was of course a taunt. You don’t like it? So sue me. What are you going to do about it? I took your place at the lunch table? So sue me. I stole your snacks? So sue me. Pretty heady stuff, you’ll agree. Indeed, it’s hardly surprising that this flurry of prepubescent litigiousness was exciting enough to convince a few of those involved to pursue a professional career in the field.

In contract law, there’s a concept that we might call “calculated breach,” which basically involves one party deciding that it would gain more from breaking the terms of their contract with another party than by meeting them. It happens a lot in construction disputes: one party will realise it’s going to cost them a huge amount to get a project finished on time, and that it would be financially advantageous to refuse to fulfil their side of the bargain, accepting that they’ll probably have proceedings brought against them. In fact, there’s a whole area of case law on the issue of one party paying another party extra to do what that party already said they’d do. Fundamentally though, calculated breach is adults telling each other, “so sue me,” save for that where we as kids meant, “what are you going to do about it?”, the adults mean, “no seriously, take me to court. Yes, I’ve breached the contract. In fact, it’s to my advantage not to fulfil my end of the bargain, even if that means paying you damages.” There’s a strong case to be made that calculated breach is, to use the technical legal term, a pretty dick-ish move. Needless to say, it happens all the time.

_______

An issue of free speech? Not a chance.

For the past few weeks, the media has been dominated by news and commentary on the topless photos published of Kate, Duchess of Cambridge. Most of this has centred on issues of press freedom, the right to and expectation of privacy, the role and ethics of the paparazzi, and whether normal (UK) attitudes towards public nudity apply in the freewheeling, breast-baring continental European context (“It’s totally normal!” various editors have shrugged, including Laurence Pieau, of Closer (pictured), as if these photos were no different from any others of the royal couple.)

It’s incredible that it could really be necessary to point out that these photos are, in fact, rather different. All the same, indulge me momentarily. The images might well be something seen every day on the beaches of the Mediterranean. They may certainly be of a “young couple in love” – although the cover screaming “Oh my God!” and the article title “Sex et sun en Provence!” somewhat undermines the claim that these are nothing more than tasteful shots of domestic bliss. None of this changes the fact that they were also taken from roughly a half-mile away, possibly as a result of someone trespassing on private property, and in a moment where the Duchess cannot realistically have had any idea that she was being or would be photographed. John Major was right when he claimed that the photos were the work of “peeping Toms” rather than legitimate journalists. He’s got a good point: if people told us they’d hid in the bushes using a telescope to spy from 800 yards away on a young woman partially undressing, surely we’d ridicule and dismiss them as voyeuristic perverts, and tell them to stop grinning and to take their hands out of their pockets while they were at it. How can changing the telescope to a camera and publishing the photos transform the result into “journalism”?

Furthermore, French privacy law on this point is clear[1]. By way of background, the French interpret the right to privacy as entitling anyone, irrespective of rank, from priest to pauper to Président, to oppose the dissemination of his or her picture without the express permission of the person concerned. A classic example is a photograph of a monarch that showed her away from public life (The Farah Diba case – judgment of the Court de Cassation (pictured, below), 13 April 1988 – summary here). The topless photographs of the Duchess of Cambridge are, if anything, an even more clear-cut violation.

Under Article 226-1.2 of the French Penal Code (see footnote above), it is an offence, “intentionally and by means of any process whatsoever, to infringe private life of another [person]… by taking, recording or transmitting, without his or her consent, the picture of a person who is in a private place.” Such consent “is presumed where the recording or the taking of the picture takes place in a meeting and openly and publicly.” Article 226-2 prescribes the same penalties for publishing or making public knowledge the material caught by the previous section. So much for the letter of the law: as for the spirit, the purpose of these provisions is clearly to curb the behaviour of the paparazzi. Under the law, the case would seem to be ouvert et fermé, as the French definitely wouldn’t say.[2]

That’s why all the talk about this being a free-speech and privacy issue is little more than smoke and fluff. The responsible editors trot out these illusionary arguments as a distraction, and the pundits miss the point when they take the bait.

Rather, the issue is better viewed as a case of calculated breach. It is suggested here that the editors knew darn well that what they were doing was a breach of privacy – they simply felt the money they’d rake in from the increased sales provided by the scandal would far outweigh whatever they might eventually pay in damages. Far from ever engaging with the moral principles of free speech and what privacy public figures realistically can expect, the decision was simply a cynical calculation: “Sex and scandal sell. Titillation talks at the till. So sue me.”

_______

In the context of a purely contractual dispute, calculated breach is understandable. It might be morally dubious, if we believe there is significance in giving your word, value in sticking to your agreements, and so on. But whether that kind of interpersonal morality applies to dealings between companies is debatable at best. Financially, and certainly legally, it’s pretty straightforward: there was a contract for certain value, either the contract itself or the underlying legal framework provides for what happens when it isn’t fulfilled, and the breaching party feels that it would be cheaper to break the contract – accepting that damages flowing from litigation are never perfectly predictable – than to keep it. In certain instances, one could even make the case that company directors would be irresponsible not to break a contract, if completing it would be prohibitively expensive.

That kind of logic is defensible when both parties are dealing in the same currency. We know what the decision will cost the other party. There’s no hard feelings – just simple sums. Cash is cash. It’s a pretty simple calculus for a court to perform. It’s another thing entirely, however, when the damage to the other party – the “harm” done – is of a fundamentally different nature to the benefit being gained. If it’s right to view the decision to publish the photos through the lens of calculated breach, then the decision is particularly reprehensible because the editors can’t possibly have been able to consider the “damage” done. The value of increased sales is measured in a different “currency” than Kate’s reputation, dignity, and feelings, and there’s no exchange rate.

The hope here is that the French courts throw the book at the editors who decided – privacy laws be damned – that the potential benefits to their bottom line were worth getting taken to court over. The alternative is to implicitly sanction any kind of behaviour that one side thinks is “worth” paying a penalty for. If, even factoring in the penalty, they still come out ahead, then why not go for it?

There are always going to be grey areas where the line blurs between legitimate publication by a free press and individuals’ reasonable expectations of privacy. It’s for these “reasonable disagreements” that we have “reasonable” damages for invasion of privacy or libel, if those charges can be proven.

I don’t think this is one of those cases of “reasonable disagreement,” though. French law couldn’t be clearer on the point. The attitude implied in the publication of the photos in question is cavalier in the extreme and reckless with kinds of currency – reputation, privacy, body image – that can’t possibly be appraised. That’s why the only option for the courts is to make it clear that cynical decisions such as these won’t be worth it. In the same way that we have amplified penalties for “aggravated” versions of crimes such as assault, we should provide for “aggravated” invasion of privacy at times where there can have been no reasonable belief in the legality of a publication – effectively, these “calculated breach” type instances. The court should not only award Kate all the profits earned from the sales of the issue in question, but grant additional punitive damages. If it’s established that the photos were procured through criminal means, then the strongest punishment available should be doled out to the people involved, including the editors who bought them.

A free press is rightly cited as one of the pillars of a democratic society, but press freedom, and freedom of speech in general, isn’t unlimited, and nor should it be. And like any right, it comes with responsibilities too. One of those responsibilities for people disseminating information publicly is to reject any material that by its content or provenance clearly invades the privacy of another. The “calculated breach” logic, where one party decides it’s worth it to knowingly break the law, can’t be allowed to apply here, because it’s impossible to compare what such a breach is “worth” to both sides. If the decision is a close call, then the courts will judge, with regular damages where appropriate. But if the finding is that no reasonable person could have deemed the decision defensible in law, then damages should be exponentially greater. To encourage free speech in journalism is to our great advantage. We allow editors to shrug “so sue me!” at our peril.


[1] I accessed an electronic copy of the French Criminal Code here, and where I quote from it, the translations are my own. The relevant section begins on p. 129.

[2] Cas transparent, for the pedantic among you.

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6 comments
  1. Alex Green said:

    Thank you for the article, your dismissal of efficient breach within the context of privacy law was most interesting. It is certainly economically better for these papers to publish and as certainly wrong for them to do so in breach of duty.

    As I understand it, the most basic alleged moral grounds for efficient breach are that not only is one party better off by breaching but that the entire situation is more desirable because the net gain for each party is greater than or equal to their loss after reparation has been made. You agree in your article that this might apply in commercial contract because the harm in that context can be fully compensated by financial reparation.

    Although this is a little outside the main thrust of your article, I would appreciate your thoughts on two objections to the theory. The first is that it is too unwieldy a concept to employ outside its contemplated paradigm and therefore would make a poor rule of law. Even if a court awards a party full expectation loss for the efficient breach of a commercial contract, it cannot (at least in England and America to the best of my knowledge) compensate for more intangible economic losses such as the value of completing deals for the market credibility of the party not breaching. It is easy to imagine the example of a small construction company starting up and being subject to an efficient breach by another company, getting fully compensated for the deal in question but ultimately losing out because of the delay it experiences in cementing its position in the market. To properly correct for this sort of loss would require courts to spend such time and effort calculating economic probabilities that it would be economically inefficient for our justice system to do so. Efficient breach therefore experiences practical difficulties as a coherent justification for a rule of contract: it cannot do what it claims for the diverse parties that present themselves before courts. At best it caters to a commercial paradigm of the stable and disinterested corporate body.

    On top of this, commercial interests often impact in a very direct way on the lives of those engaged in them. Imagine a large contract for the creation of a skyscraper in New York, the completion of which would fulfil the childhood dream of the subcontracted architect. If an efficient breach causes this deal to fall through then the unilateral action of one party, or even the combined agreement of both, has caused significant upset to the architect. His loss would be both irrecoverable in fact and difficult to quantify in theory. The assumption that the commercial paradigm contains nothing but economically quantifiable and recoverable loss is therefore false (unless we engage in nominal quantification). On this basis the notion that the breach leaves all those concerned in a better position after the finances have been sorted out must also be wrong.

    Given these two problems, is it not preferable to base contract law on the idea of formalised public sphere promising? Even though it might be unintuitive to place the same duties of integrity and honesty on the fictional personhood of a company, I would have thought that this more categorical theory of contract makes better sense of that area of law than an economic one. It even explains why we only allow certain forms of loss to be recovered: we limit economic recovery for the purposes of the efficient administration of justice, cognisant that the moral harm done by the breach of a promise is not exhausted by such recovery. Not basing our theory of breach in economic outcomes allows us to do this with theoretical consistency because compensation is always a second best.

  2. Kevin Smith said:

    Hi Alex,

    Thanks very much for your comment – it’s a good question, and not one that I’m sure I have a great answer for, but here goes:

    The “counter-objection”, if you will, to both of the objections you’ve described is that the parties could have provided for these nuances in the contract. If the project was a) critical to one of the parties’ commercial future; or b) of high sentimental / personal value to a subcontractor, then the relevant contract (so the argument goes) could have been tweaked to reflect this, with high penalties for breach, provision for insurance, etc.

    I accept that this relies on a somewhat-tenuous idea of equality of bargaining power. Not every party is going to be able to put whatever nuances they want into a contract. But, to follow the argument through, they’re not being forced to enter into contract either. If *anything* (protecting sentimental value, risk of the deal breaking down and leaving a business high and dry) is seen as important but isn’t provided for in the contract, the party concerned can walk away. Thus, you’re right – the assumption that the commercial paradigm contains nothing but economically-quantifiable and recoverable loss IS false… but only because contracting parties don’t quantify and provide for all the relevant aspects when they have the chance to, pre-contract.

    I like your idea of “formalised public sphere promising” – which, as I read it, is effectively a beefed-up idea of promissory estoppel? The drawback, however, is always going to be the issue of certainty. The reason it’s so difficult to claim under promissory estoppel is because it’s nigh on impossible to prove “A promised to do X, and knew B would rely on it.” No matter how formalised the public sphere promising – and I’m all for importing duties of integrity and honesty into commercial interaction (e.g. a duty to negotiate in good faith) – there’s always going to be the question: “did these parties intend to form legal relations… and how do we know?”

    KS

    • Alex Green said:

      Thanks for your reply Kevin. I am not sure that I like the freedom of contract answer for exactly the reasons you highlight, although I would add that very often people, especially those in new business, feel they have to contract with someone with economic pressures forcing their hands. In addition, I understood your original argument to be that financial compensation could not count against certain sorts of damage, such as personal upset or reputational loss. If it can, as your reply to me seems to suggest, then why can’t these newspapers simply efficiently breach their obligations in tort by paying a hefty sum to Will and Kate? That way the upset is offset and the papers still profit. If this can be done, then doesn’t your suggestion that Kate be awarded net profits plus punitive damages evaporate somewhat? Since I agree with your conclusions about this tort, I find myself having to disagree with the economic quantification that efficient breach assumes is possible.

      Moving on, I think that contract is essentially a beefed-up version of promissory estoppel, if you want to view things along those lines. The added element of consideration, which is I think best understood after Nestle to be evidence of a meaningful bilateral agreement, allows contract to be a cause of action where promissory estoppel is generally not. The problems you cite with estoppel are of course true but equally hold for a great deal of oral or otherwise uncodified contracts. The question of what was promised is also an issue under a theory of efficient breach because it would be necessary to determine the correct apportionment of compensation for the part who was not in breach. So even if this problem was endemic, it would not count in favour of either a promissory or an economic theory of contract: it would count as an equal problem for both.

      What I really mean however is that both contract and promissory estoppel are justified by the same moral principle: in the public sphere formal (although not necessarily formalised – I should have been clearer about that) undertakings should be honoured by those making them. The reason I do not like efficient breach (and economic theories of law that justify them) is that they recast this principle as economic options. This misses out too much I think and thereby makes a poor general theory of contract.

      • Kevin Smith said:

        Hey Alex. I agree with just about all of that. The only distinction I would draw is between (a) breaches* involving parties who have had a chance to sit down and “bargain” – or at least, sit down and sign contracts free from duress, and (b) breaches where there was no opportunity for the “harmed” to have a say. It’s not that financial compensation “could not count” – apologies if my point wasn’t clear – but rather, that there’s something fundamentally different between these two types of situations, and we ought to award damages differently too.

        You’re right that very often people, particularly in new businesses, feel pressured to contract with someone. That said, I don’t think it’s the case (not that you suggest this) that these people are so desperate to contract that they don’t have the ability to choose and influence the contracts they enter into. Equally, no one’s forced them to start businesses at all – it’s necessarily a “voluntary” participation. While I accept that there may be exterior considerations (sentimental value, general commercial prospects, etc – as discussed previously), I think that in contract, efficient breach is largely an “economic” issue for the parties involved. In what I’m calling “aggravated invasion of privacy” – i.e. non-contractual harm carried out with a “calculated breach” mentality – it’s only an economic issue for one side. Consequently, the deterrent should be to remove this economic incentive – hence the heavy damages I’m proposing.

        * By way of explanation: I don’t particularly like the term “efficient” breach, because what it really means is not “efficient” but “economically sensible”, and I think it’s particularly ill-fitting for the scenario I’m describing, where Party A is knowingly harming Party B in a non-contractual situation. If “efficient breach” is in any way efficient, it’s because (per your first post), the net gain for each party might be higher. Applying it to a non-contractual setting, I’ve used “calculated breach” instead, because I think this better captures what’s going on.

      • Alex Green said:

        Thanks Kevin. I guess what I don’t understand is why the presence of a voluntary agreement automatically renders certain types of harm ‘exterior’, when those harms remain directly relevant when no voluntary agreement has taken place. Surely a particular sort of harm is just what it is, regardless of the contingencies that brought it about. Even if we do regard contract as primarily an economic matter, surely we cannot play down the moral force or individual importance of those non-economic or non-recoverable harms that do in fact arise from breach, purely on the basis that this is contract and not tort?

        Basically I don’t understand the concept of non-contractual harm: non-contractual breaches of duty that result in harm I do. Surely harm is conceptually distinct from the breach of duty that gives rise to it. So the harm resulting from the tort of battery and the crime of assault occasioning actual bodily harm can be identical: the fact that it constitutes a breach of tort and a breach of the criminal law does not mean that it is divisible in some way into tortious and criminal harm. There is merely one type of harm with two types of duty forbidding it. If this is so then we need an argument for why certain forms of harm should count differently in contract from the way that they do in certain torts. (Or to put it another way, why we do not think that contracts include duties to avoid certain types of harm, whereas certain torts do.) I think this is what you have begun to provide with your most recent answer: because contract requires positive action by both parties then they should have gone into agreement with their eyes open to certain risks. That is not an economic argument however but a moral one of personal responsibility.

        The problem for efficient breach/economic theory as a theory of contract is that they just ignore non-economic harm altogether. The best point in their favour I think is that they do explain why punitive damages are not just handed out following every breach of contract. I am just not sure that this is enough to offset the omissions. Given your most recent answer however, it seems that I am guilty of misunderstanding you: I thought that you were arguing for the potential applicability of efficient breach (along the lines that it has been developed by Posner) as a partial theory of commercial contract and then distinguishing that from the law of tort. If all you are doing is assessing the beliefs of certain persons regarding how they can use the law of contract to their economic advantage, regardless of what justification that area of law really operates under, then I have been charging at a windmill. Oops!

  3. Kevin Smith said:

    Partial windmill charge, perhaps :) The argument, in a nutshell, was (a) “this is the attitude that prompts (calculated) breach in a commercial context”; (b) “we can interpret certain cynical editorial decisions as having the same mentality”; and (c) the latter category is worse, and deserves harsher punishment, because the victim of the breach didn’t have a chance to “see it coming” in the way that contracting parties do.

    “Non-contractual harm” wasn’t the most elegant phrasing – what I meant was, “harm done in a context in which damages are not governed by a contract.” Applying “efficient” breach to this gives a situation where Party A deliberately breaks the law for economic advantage, notwithstanding the fact that the eventual damages aren’t governed by contract. This, I’m arguing, is what the editors did with the topless photos.

    The voluntary quality of a contractual relationship, in my view, is key. In such a relationship, presumably all types of foreseeable harm *could* have been provided for. What’s “exterior” is anything that the parties have chosen to leave out of the contract, as opposed to the provisions within it. The argument I’m making isn’t like comparing battery and assault; it’s more like comparing the bruises of a boxer versus the bruises of an assault victim.

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