The Cost of Guilty Breach: Willful Breach in M&A Contracts

Authors

Theresa Arnold
Amanda Dixon
Madison Whalen Sherrill
Hadar Tanne
Mitu Gulati, Duke Law SchoolFollow

Document Type

Article

Publication Date

2021

Keywords

damages, contracts, option, M&A

Abstract

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 is at least one significant area of transactional practice that rejects the perspective that fault is irrelevant to contract breach.

Citation

Theresa Arnold et al., The Cost of Guilty Breach: Willful Breach in M&A Contracts, 62 Boston College Law Review, E. Supp. I.-32-48 (2021)