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Articles 1 - 16 of 16
Full-Text Articles in Law
The Exit Structure Of Venture Capital, D. Gordon Smith
The Exit Structure Of Venture Capital, D. Gordon Smith
Faculty Scholarship
Venture capital contracts contain extensive provisions regulating exit by the venture capitalists. In this Article, Professor Smith employs financial contracting theory in conjunction with original data collected from 367 venture-backed companies to analyze these exit provisions. He concludes that the combination of exit provisions in a typical venture capital relationship serves to lock venture capitalists into the investment during the initial stage. In later stages of the relationship, the venture capitalists acquire increasing control over exit by securing additional seats on the board of directors and by obtaining contractual exit rights. The result is a sophisticated transfer of control from …
The Exit Structure Of Strategic Alliances, D. Gordon Smith
The Exit Structure Of Strategic Alliances, D. Gordon Smith
Faculty Scholarship
Today, many biotechnology firms use strategic alliances to contract with other companies. This article contends that the governance structure of these alliances - specifically, the contractual board - provides an integrated restraint on opportunism. While an alliance agreement's exit structure could provide a check on opportunism by allowing the parties to exit at will, such exit provisions also can be used opportunistically. Most alliance agreements, therefore, provide for contractual lock in of the alliance partners, with only limited means of exit. Lock in, of course, raises its own concerns, and the contractual board - which typically is composed of representatives …
Contemplating A Civil Law Paradigm For A Future International Commercial Code, Wayne R. Barnes
Contemplating A Civil Law Paradigm For A Future International Commercial Code, Wayne R. Barnes
Faculty Scholarship
The international community has worked toward a global law of contracts for the last century. These efforts include the Uniform Law on the International Sale of Goods, the Uniform Law on the Formation of Contracts for the International Sale of Goods, the UNIDROIT Principles of International Commercial Contracts, the Principles of European Contract Law, and the Vienna Convention for the International Sales of Goods (CISG). These texts are all tremendous achievements in their own right. However, they reflect a delicate juxtaposition of the two primary legal systems of the world --- the civil law and the common law. A consequence …
Risk Management In Long-Term Contracts, Victor P. Goldberg
Risk Management In Long-Term Contracts, Victor P. Goldberg
Faculty Scholarship
Long-term contracts are designed to manage risk. After a brief discussion of why it is unhelpful to invoke risk aversion for analyzing serious commercial transactions between sophisticated entities, this paper focuses on adaptation to changed circumstances. In particular, it considers the options to abandon and the discretion to change quantity. It then analyzes a poorly designed contract between Alcoa and Essex showing how the parties misframed their problem and designed a long-term contract that was doomed to fail.
Introduction, David J. Seipp
Introduction, David J. Seipp
Faculty Scholarship
Have we come to bury Lochner, or to praise it? Lochner v. New York,' decided 100 years ago, gave its name to an era in which judges struck down popular statutes that regulated hours, wages, and conditions of work, on grounds that such labor regulations violated a constitutional liberty of contract. After 1937, Lochnerism and Lochnerizing were more or less uniformly condemned by judges and law professors alike. Recently, some scholars have tried to resurrect the Lochner approach, presumably as a way to render much of the twentieth-century regulatory state unconstitutional.
Common-Law Disclosure Duties And The Sin Of Omission: Testing The Meta-Theories, Kimberly D. Krawiec, Kathryn Zeiler
Common-Law Disclosure Duties And The Sin Of Omission: Testing The Meta-Theories, Kimberly D. Krawiec, Kathryn Zeiler
Faculty Scholarship
Since ancient times, legal scholars have explored the vexing question of when and what a contracting party must disclose to her counterparty, even in the absence of explicit misleading statements. This fascination has culminated in a set of claims regarding which factors drive courts to impose disclosure duties on informed parties. Most of these claims are based on analysis of a small number of non-randomly selected cases and have not been tested systematically. This article represents the first attempt to systematically test a number of these claims using data coded from 466 case decisions spanning over a wide array of …
Reading Wood V. Lucy, Lady Duff-Gordon With Help From The Kewpie Dolls, Victor P. Goldberg
Reading Wood V. Lucy, Lady Duff-Gordon With Help From The Kewpie Dolls, Victor P. Goldberg
Faculty Scholarship
In Wood v. Lucy, Lady Duff-Gordon, Cardozo found consideration in an apparently illusory contract by implying a reasonable effort obligation. Unbeknownst to Cardozo, Wood had agreed to represent Rose O'Neill, the inventory of the kewpie doll in an earlier exclusive contract. Wood sued O'Neill two months prior to entering into the Lucy arrangement. That contract included an explicit best efforts clause. The failure to include such a clause in this contract was, quite likely, deliberate, suggesting that Wood was trying to avoid making a binding commitment to Lucy. The paper examines both the kewpie doll and Lucy contract in some …
A Pluralist Approach To Interpretation: Wills And Contracts, Kent Greenawalt
A Pluralist Approach To Interpretation: Wills And Contracts, Kent Greenawalt
Faculty Scholarship
This account of legal interpretation focuses mainly on wills and contracts. It adopts a pluralist approach, one that treats a number of factors as potentially relevant and does not assume that all relevant factors necessarily reduce to one overarching inquiry that is the same whatever legal text is being interpreted.
Evolving Business And Social Norms And Interpretation Rules, Nancy Kim
Evolving Business And Social Norms And Interpretation Rules, Nancy Kim
Faculty Scholarship
Rapid societal and technological changes - such as the rise in electronic commerce, increasing diversity and globalization - create contract interpretation issues that require a dynamic approach. While many modern contractual disputes arise from a confluence of factors, contract doctrine has tended to adopt a unitary approach to problems with an emphasis on interpretation of words. This article argues that non-intuitive interpretation rules work to the disadvantage of language and cultural minorities and should only be used if their purpose is to determine the intent of the parties or to uphold a policy or legislative objective. A dynamic approach is …
Incomplete Contracts And The Theory Of Contract Design, Robert E. Scott, George G. Triantis
Incomplete Contracts And The Theory Of Contract Design, Robert E. Scott, George G. Triantis
Faculty Scholarship
We are delighted to accept this invitation to write a short essay on the economic theory of incomplete contracts and to illuminate its current and potential impact on the legal analysis of contracts and contract law. Economic contract theory has made significant inroads in legal scholarship over the past fifteen years, and this is a good time to take stock of its strengths and weaknesses. Several recent publications in the Yale Law Journal have offered evaluations of the contributions of contract theory.' In this essay, we offer our opinion as to its future path in legal scholarship. In particular, we …
On Collaboration, Organizations, And Conciliation In The General Theory Of Contract, Ethan J. Leib
On Collaboration, Organizations, And Conciliation In The General Theory Of Contract, Ethan J. Leib
Faculty Scholarship
Daniel Markovits's Contract and Collaboration is a thought-provoking and ground-breaking inquiry into the ethics of contract. It argues that the philosophical foundation of contract may be found in what Markovits calls the collaborative view: a principle of forming respectful communities of collaboration where contractors treat each other as ends in themselves and refrain from treating each other as mere instrumentalities. Markovits acknowledges that there are three prototypical forms of contracts: (1) person-to-person; (2) person-to-organization; and (3) organization-to-organization. He is refreshingly honest in arguing that his theory of contract only addresses Type (1) contracts. I wish to argue here that this …
Contractual Incompleteness: A Transactional Perspective, Avery W. Katz
Contractual Incompleteness: A Transactional Perspective, Avery W. Katz
Faculty Scholarship
Recent scholarship in the field of contract law has concentrated on contractual incompleteness-that is, on the fact that except in the simplest and most basic transactions, contracting parties do not work out all of the relevant details and contingencies of their relationship at the outset. The reasons for incomplete contracts are varied. Sometimes parties deliberately leave terms unresolved, trusting future negotiations or social norms to fill in any problems that emerge. Other times, they leave terms unresolved without realizing they have done so, in part because they devote limited attention or resources to their negotiations and in part because contracts …
Financial Contracts And The New Bankruptcy Code: Insulating Markets From Bankrupt Debtors And Bankruptcy Judges, Edward R. Morrison, Joerg Riegel
Financial Contracts And The New Bankruptcy Code: Insulating Markets From Bankrupt Debtors And Bankruptcy Judges, Edward R. Morrison, Joerg Riegel
Faculty Scholarship
The reforms of 2005 yield important but subtle changes in the Bankruptcy Code's treatment of financial contracts. They might appear only to eliminate longstanding uncertainty surrounding the protections available to financial contract counterparties, especially counterparties to repurchase transactions and other derivative contracts. But the ambit of the reforms is much broader. The expanded definitions – especially the definition of "swap agreement" – are now so broad that nearly every derivative contract is subject to the Code's protection. Instead of protecting particular counterparties to particular transactions, the Code now protects any counterparty to any derivative contract. Entire markets have been insulated …
Derivatives And The Bankruptcy Code: Why The Special Treatment?, Franklin R. Edwards, Edward R. Morrison
Derivatives And The Bankruptcy Code: Why The Special Treatment?, Franklin R. Edwards, Edward R. Morrison
Faculty Scholarship
The collapse of Long Term Capital Management (LTCM) in Fall 1998 and the Federal Reserve Bank's subsequent efforts to orchestrate a bailout raise important questions about the structure of the Bankruptcy Code. The Code contains numerous provisions affording special treatment to financial derivatives contracts, the most important of which exempts these contracts from the "automatic stay" and permits counterparties to terminate derivatives contracts with a debtor in bankruptcy and seize underlying collateral. No other counterparty or creditor of the debtor has such freedom; to the contrary, the automatic stay prohibits them from undertaking any act that threatens the debtor's assets. …
Anticipating Litigation In Contract Design, Robert E. Scott, George G. Triantis
Anticipating Litigation In Contract Design, Robert E. Scott, George G. Triantis
Faculty Scholarship
Contract theory does not address the question of how parties design contracts under the existing adversarial system, which relies on the parties to establish relevant facts indirectly by the use of evidentiary proxies. In this Article, we advance a theory of contract design in a world of costly litigation. We examine the efficiency of investment at the front end and back end of the contracting process, where we focus on litigation as the back-end stage. In deciding whether to express their obligations in precise or vague terms, contracting parties implicitly allocate costs between the front and back end. When the …
Featuring The Three Tenors In La Triviata, Victor P. Goldberg
Featuring The Three Tenors In La Triviata, Victor P. Goldberg
Faculty Scholarship
In the “Three Tenors” case the FTC found an agreement to be an antitrust violation despite the fact that there was no way it could be anticompetitive. The Commission failed to heed the lessons of Coase’s classic paper on the nature of the firm, making a sharp distinction between activities within a firm (legal) and across firm boundaries (not legal). Analytically, there should be no distinction. The decision to integrate activities by contract rather than ownership is a matter of relative transactions costs. Since the boundaries of the firm are, ultimately, an economic decision reflecting the costs and benefits of …