Law Commons^™

The Cost Of Guilty Breach: Willful Breach In M&A Contracts, Theresa Arnold, Amanda Dixon, Madison Whalen Sherrill, Hadar Tanne, Mitu Gulati

Faculty Scholarship

The traditional framework of United States private law that every first-year 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 …