In our paper we consider situations in which the parties are in disagreement about the allocation of a certain risk, and either party could have acted ex-ante to prevent breach, to lower its probability or to insure against it, but neither did so. When the state-of-the-world is revealed there remain steps the parties can take to prevent breach or mitigate damages. In such an instance, a strict liability regime can make it difficult for the parties to carry out such steps if each party believes the court will allocate the risk to the other party. We consider other regimes, including negligence, comparative fault and anti-insurance, and show that none of these always yield the first-best solution in all cases that allows the parties to prevent breach or the additional damages. We suggest a mechanism designed to allow the parties to move forward and fulfill efficient contracts without court intervention. In this mechanism the court announces that any party that invests half the optimal level of precautionary costs as determined jointly by the parties is off-the-hook, and that if each party invests this amount the damage will be split. We demonstrate that this achieves optimality by leading the parties to jointly determine the optimal level of precautionary costs and to allocate the desired steps to the low-cost bearer. In addition, the mechanism leads to revelation of private information. Finally, we discuss the possibility of making the rule mandatory. By predetermining the equal split, the suggested mechanism brings renegotiation costs to a minimum because the parties only have to allocate the physical tasks between them
