The Empirical Case for Specific Performance: Evidence from the IBP-Tyson Litigation

Abstract

Contract scholars debate the relative merits of specific performance and damages, but few studies assess remedies from an empirical perspective. This article examines the stock market response to an unusual specific performance award granted to IBP, Inc. in material adverse charge (MAC) clause litigation against Tyson Foods, Inc. The combined value of Tyson and IBP rose after specific performance was granted, implying that specific performance created value. This result contrasts with other papers indirectly showing large decreases in combined market value after damages remedies are awwarded. These results suggest that, from a postbreach perspective, the common law's preference for damages may be misplaced. The article identifies a number of settings, such as certain types of MAC clause controversies, wherein the use of specific performance rather than damages should be encouraged.