Winning a lawsuit over a contract can actually backfire by blowing up the private business network you rely on.
April 2, 2026
Original Paper
The Wrong Plaintiff: Contract Damages versus Network Expulsion and the Collapse of Distributed Governance
SSRN · 6433378
The Takeaway
Many professional trade groups maintain order through the threat of kicking members out (ostracism). When a court awards money instead of letting the group exclude a rule-breaker, it strips the group of its only real power, causing the entire self-governing system to fall apart.
From the abstract
<p>Courts awarding standard contract remedies can destroy private network governance. In collectively governed trading networks, commercial cooperation often depends on the credible threat of ostracism. That threat is best understood as a club good: excludable because only members benefit from the network’s ability to sanction rule-breakers, and nonrivalrous because one member’s benefit from that enforcement capacity does not diminish another’s. Indeed, the threat often exhibits positive network