"LIPSTICK ON A PIG": SPECIFIC PERFORMANCE CLAUSES IN ACTION.

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]