Efficient Breach Law and Legal Definition

Black’s law dictionary defines efficient breach is an intentional breach of contract and payment of damages by a party who will incur greater economic liability than performing under the contract. Efficient breach theory has been used to defend the traditional common law rule that a non tortious breach of contract cannot be remedied by punitive damages and penal damages. A penalty clause can discourage an efficient breach of contract.[Lake River Corp. v. Carborundum Co., 769 F.2d 1284 (7th Cir. Ill. 1985)]