efficient breach

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An efficient breach is a breach of contract in which the breaching party finds it cheaper to pay damages than to perform under the contract. Unlike accidental breaches of contract, efficient breaches are intentional decisions not to uphold one party’s end of an agreement. 

The widespread adoption of efficient breach theory means that damages in breach of contract cases is typically restricted to actual damages rather than punitive damages

[Last updated in October of 2022 by the Wex Definitions Team]