The effect of time on default remedies for breach of contract

► We show that time needed for court proceedings affects default remedies for breach. ► If renegotiation is infeasible no default remedy yields efficient breach decisions. ► With renegotiation, expectation and punitive damages can yield excessive breach. ► With renegotiation, specific performance always yields the efficient outcome. ► Punitive damages are shown to not always serve as Property Rules.