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The traditional framework of United States private law that every firstyear student learns is that contracts and torts are different realms--contracts is the realm of strict liability and torts of fault. Contracts, we learn from the writings of Justice Holmes and Judge Posner, are best viewed as options; they give parties the option to perform or pay damages. The question we ask is whether, in the real world, that is indeed how contracting parties view things. Using a dataset made up of one thousand mergers and acquisitions (M&A) contracts and thirty in-depth interviews with M&A lawyers, we find that there is at least one significant area of transactional practice that rejects the perspective that fault is irrelevant to contract breach. [ABSTRACT FROM AUTHOR]

The black letter law in the U.S. is that money damages are the preferred remedy for contract breach and that specific performance is reserved for extraordinary circumstances. Contract theory tells us that default rules generally reflect what a majority of contracting parties would agree to had they considered the matter. But do contracting parties agree with the law's preference for money damages over specific performance? In a dataset of more than 1,000 M&A contracts, we find that in over 80% of transactions, parties choose specific performance as their preferred remedy. Using interviews with senior M&A lawyers, we seek to unpack the reasons why parties are contracting around the law's distaste for specific performance and the default rule of money damages. [ABSTRACT FROM AUTHOR]