Law Commons^™

Reconsidering Disclosure And Liability In The Transatlantic Capital Markets, Mark Brewer, Orla Gough, Neeta Shah

Mark Brewer

In response to the current global financial crisis, governments around the world are introducing some of the most significant changes financial regulation since the Great Depression. However, these efforts fail to fundamentally alter the current overreliance on disclosure and fail to achieve international cooperation in deterring the next financial crisis. The article explores some of the limits of disclosure as a basis for financial regulation and to suggest international regulatory coordination of liability standards to help curtail the risky behavior that often leads to the pattern of boom and bust in the global financial markets. The purpose of this article …

Assessing The Applicability Of The Business Judgment Rule And The “Defensive” Business Judgment Rule In The Chinese Judiciary: A Perspective On Takeover Dispute Adjudication, Xiao-Chuan Charlie Weng

Xiao-chuan Charlie Weng

With the surge of takeovers in China, many issues regarding takeover adjudication and legislation have increasingly received academic attention. The issues of the independence and professionalization of the judiciary and the scarcity of legislation on duty of care are the major predicaments facing corporate China. Massive legislative and judicial reform of takeover adjudication is not viable in the near future. However, U.S. common law standards of review, including the business judgment rule and serial rules against hostile takeover, with diacritical the business judgment rule stamp, may hold potential for reform within the current economic environment. The article investigates the problems …

Disputes Related To Healthcare Across National Boundaries: The Potential For Arbitration, Deth Sao

Deth Sao

Trade in international health services has the potential to play a leading role in the global economy, but its rapid growth is impeded by legal barriers. Advances in technology and cross-border movement of people and health services create legal ambiguities and uncertainties for businesses and consumers involved in transnational medical malpractice disputes. Existing legal protections and remedies afforded by traditional judicial frameworks are unable to resolve the following challenges: (1) assertion of personal jurisdiction; (2) choice of forum and law considerations; (3) appropriate theories of liability for injuries and damages arising from innovations in medical care and delivery of health …

How The Payday Predator Hides Among Us: The Predatory Nature Of The Payday Loan Industry And Its Use Of Consumer Arbitration To Further Discriminatory Lending Practices, Michael A. Satz

Michael A Satz

This Article argues that Payday lending is a predatory lending practice that disproportionately targets minority customers, and that the Payday lending industry utilizes consumer arbitration agreements to further the industry’s discriminatory lending practices. The Article proposes that protections enacted into law to protect military service members from payday lenders should be universally enacted on a national level.

Enforceability Of Covenants Not To Compete In At-Will Employment Relationships In Texas, Eric G. Behrens

Eric G. Behrens

Abstract of: The enforceability of covenants not to

compete in at-will employment relationships in Texas

Although non-compete covenants are restraints against trade, the Legislature provides they are enforceable if they comply with the criteria outlined in the Covenants Not to Compete Act, TEXAS BUSINESS & COMMERCE CODE § 15.50(a), et seq. This article traces how the Texas Supreme Court has interpreted those criteria between 1994 – 2009, the steps for crafting an covenant and the considerations given by courts in determining if it is enforceable, and the trend toward greater enforcement of such covenants.

For roughly twelve years, Light v. …

The Mortgage Market Crisis: A Game Theory Analysis, Raquel Mato

Raquel Mato

The mortgage market experienced a global bubble during the early 2000s. The bubble burst in 2006, creating a global financial crisis with widespread repercussions. In this paper, I will discuss how the mortgage market normally works and what changes occurred leading up to the 2000s that allowed for the rapid expansion of the mortgage market. I will talk about contributing factors such as: deregulation of the market, government encouragement of homeownership, the mortgage backed securities market, existing legislation, and a general lack of responsibility by all parties involved. I will use various aspects of game theory to explain how this …

International Law And Domestic Judicial Procedure: Implementing The Hague Convention On Choice Of Court Agreements In The American Federal System, Carolyn Dubay

Carolyn Dubay

In 2009, the United States became a signatory to the Convention on Choice of Court Agreements (COCCA), drafted under the auspices of the Hague Conference on Private International Law. The stated objective of the Convention was to "promote international trade and investment through enhanced judicial co-operation." Despite these broad goals, COCCA is narrowly drawn to relate only to international commercial disputes subject to a negotiated choice of court agreement. With respect to forum selection clauses in international business-to-business contracts, COCCA creates uniform procedural rules for the enforcement of such clauses in both the courts designated in such clauses (“chosen courts”), …

Do Accounting Rules Matter? The Dangerous Allure Of Mark To Market, Todd Henderson, Richard Epstein

Todd Henderson

This paper examines the relative strength of two imperfect accounting rules: historical cost and mark to market. The manifest inaccuracy of historical cost is well known, and, paradoxically one source of its hidden strength. Because private parties know of its evident weaknesses they look elsewhere for information. In contrast, mark to market for hard-to-value assets has many hidden weaknesses. In this paper we show how it creates asset bubbles and exacerbate their negative collateral consequences once they burst. It does the former by allowing banks to adopt generous valuations in up-markets that increase their lending capacity. It does the latter …

An Ethical Rabbit Hole: Model Rule 4.4, Intentional Interference With Former Employee Non-Disclosure Agreements And The Threat Of Disqualification, Maura I. Strassberg

Maura I Strassberg

ABSTRACT The Model Rule 4.4 prohibition on the use of methods of obtaining evidence that violate the rights of third parties can be read to prohibit the informal questioning of a former employee with a non-disclosure agreement to advance a proposed or pending lawsuit, as this may constitute the tort of intentional interference with contract. The use of non-disclosure agreements is proliferating and, although actual tort liability in this context has hardly ever been litigated, it is easy to strategically use this tort to allege an ethical violation that can be the basis of a disqualification motion. The threat of …

Was Selden Right? The Expansion Of Closed Seas And Its Consequences, Scott Shackelford

Scott Shackelford

This Article focuses on the relationship between the legal regimes governing offshore resources in the continental shelves and the deep seabed, particularly in reference to the extent to which continental shelf claims are encroaching on the deep seabed. The question of how well these respective legal regimes regulate resource exploitation will also be considered, along with an analysis of the underlying reasons driving change in these governance structures. I argue that the primary issue is one of whether vague rules, particularly UNCLOS Article 76, are working in terms of incentivizing sustainable, peaceful development of offshore resources.

Is Chapter 15 Universalist Or Territorialist? Empirical Evidence From United States Bankruptcy Court Cases, Jeremy Leong

Jeremy Leong

No abstract provided.

Understanding Exclusion Of The Cisg: A New Paradigm Of Determining Party Intent, William P. Johnson

William P. Johnson

No abstract provided.

Lessons In Price Stability From The U.S. Real Estate Market Collapse, Andrea J. Boyack

Andrea J Boyack

The U.S. residential housing market collapse illustrates the consequences of ignoring risk while funding mortgage borrowing. Collateral over-valuation was a foundational piece of the crisis. Over the past few decades, secondary markets, securitization, policy and psychology increased the flow of funds into real estate. At the same time, financial market segmentation divorced risk from reward. Increased mortgage capital availability, unmitigated by proper risk allocation, led to real estate price inflation. Social trends and government policies exacerbated both the mortgage capital over-supply and the risk-valuation disconnect.

The Dodd-Frank Act inadequately addresses the underlying asset valuation problem. Federal regulation may support market …

Uncitral, Security Rights And The Globalisation Of The Us Article 9, Gerard Mccormack Professor

Gerard McCormack

Abstract – “UNCITRAL, Security Rights and the globalisation of the US Article 9” UNCITRAL, the United Nations Commission on International Trade Law, has recently produced a Legislative Guide on more particularly on secured transactions, or secured credit law as it is variously called. The Guide follows the broad contours of Article 9 of the United States Uniform Commercial Code though it is not an exact copy. It aims to harmonise and modernise the law of secured credit across the globe. In UNCITRAL’s view, the Legislative Guide will aid the growth of individual businesses and also in general economic prosperity. Harmonisation …

Controlling Creditor Opportunism, Jonathan C. Lipson

Jonathan C. Lipson

This paper addresses problems of creditor opportunism. “Distress investors” such as hedge funds, private equity funds, and investment banks are opportunistic when they use debt to obtain control of a financially troubled firm and extract improper gains at the expense of the firm and its other stakeholders. Examples include the mis-use of private information to short-sell a borrower’s securities and creditor self-dealing.

Creditors can act opportunistically because legal doctrines that historically checked such behavior—e.g., “lender liability”—have not kept pace with fundamental changes in the market for control of distressed firms. The recent Dodd-Frank financial reform is not likely to change …

The Conundrum Of Covered Bonds, Steven L. Schwarcz

Steven L Schwarcz

Covered bonds, which have been part of European finance since the time of Frederick the Great, are now being widely touted as the answer to securitization’s imperfections. There is great confusion, though, about the nature of covered bonds and their relationship to secured bond financing and securitization. This article attempts to demystify covered bonds, examining how they fit within a larger financing framework, analyzing their legal rights and obligations, and comparing their costs and benefits. The benefits of covered bonds are similar to those of securitization; both can access low-cost capital market funding with low risk to their investors, and …

Smoke, Mirrors & Contract Law, Danielle K. Hart

Danielle K Hart

Abstract: Contract law is set up to be transaction enforcing, that is, to be binding. Binding means two different but related things. First, “binding” means that the contract is valid as between the parties (because it satisfies contract law’s formation requirements) and, second, it means that the rights and obligations set forth in that contract will be enforced by the state on behalf of one of the parties over the objection of the other, now resisting party. Modern contract law uses several well-established assumptions about the contracting parties, including the way they behave when contracting, and the roles of the …

Take This House And Shove It: The Emotional Drivers Of Strategic Default, Brent T. White

Brent T. White

An increasingly influential view is that strategic defaulters make a rational choice to default because they have substantial negative equity. This article, which is based upon the personal accounts of over 350 individuals, argues that this depiction of strategic defaulters as rational actors is woefully incomplete. Negative equity alone does not drive many strategic defaulters’ decisions to intentionally stop paying their mortgages. Rather, their decisions to default are driven primarily by emotion – typically anxiety and hopelessness about their financial futures and anger at their lenders’ and the government’s unwillingness to help. If the government and the mortgage industry wish …

Information Defects In The Age Of Information: When More Is Less, Edward C. Combs Jr.

Edward C Combs Jr.

Warning labels from product manufacturers serve both as a shield to the consumer from physical injury and as a safeguard to the manufacturer from civil liability. A question then arises whether these two distinct interests, that of the manufacturer and of the consumer, are equally protected by our current products liability jurisprudence. Another way to approach this question is by asking when is a product deemed “safe”? Is it determined by an assessment of the totality of injuries associated with its use or do we arrive at the premise that a product is “safe” when a court finds no liability …

Designing Privilege For The Tax Profession: Comparing I.R.C. § 7525 With New Zealand’S Non-Disclosure Right, Keith A. Kendall

Keith A Kendall

The United States and New Zealand are the only two common law jurisdictions to have successfully extended attorney-client privilege to non-lawyer tax advisers. While aimed at the common goal of such an extension, the two statutory rules implement very different means to achieve this purpose; the United States importing the common law into statute, with New Zealand creating a completely separate statutory right. An examination of the context and legislative histories of the respective statutory provisions finds that these forms are consistent with the legislative approach to evidentiary privileges in each jurisdiction and is, therefore, appropriate in each case. Other …

Liability For Trademark Infringement For Internet Service Providers, Katja G. Weckstrom

Katja G Weckstrom

ABSTRACT Liability for Trademark Infringement for Internet Service Providers Katja Weckström*

At the wake of the millennium and the rise of the internet, legislative action was taken to shelter internet service providers (ISPs) from various forms of legal action. In the turmoil of chartering new and unregulated territory, such a safe harbor was deemed necessary to protect up-starting businesses. Today, these internet actors e.g. Google, Amazon and eBay have grown strong and powerful. Thus, intellectual property holders have started to challenge this privilege in court. Increasingly, owners of famous marks seek liability and damages for direct and indirect trademark infringement …

The Special Litigation Committee Defense In California: Specially Detrimental To Shareholders, Thomas Doniger

Thomas Doniger

This article analyzes the Special Litigation defense (“SLC Defense”), as recently adopted in California. The SLC Defense is based upon the Business Judgment Rule and is a defense frequently asserted by directors when charged by shareholders, in a derivative action, with misappropriation of corporate assets or waste. California has departed from the two most common constructions of the SLC Defense and, as a result, the SLC Defense affords directors in California more protection against shareholder claims than is available in almost every other state. This article examines the derivation and adoption of the SLC Defense in California; analyzes and criticizes …

Roe V Nebbia: Could Roe Be In Constitutional Jeopardy?, R. Morris Coats, Victor Parker, Shane Sanders, Bhavneet Walia

Shane D. Sanders

This study provides a positive analysis of abortion price regulation. Given Court precedent on the issues of abortion and state price regulation, the implementation of an abortion price control would create a potential legal conundrum. The price of abortion best meeting a state’s needs may affect incidence of legal abortion as would a direct market limitation or ban. Abortion price controls are evaluated with respect to relevant issues of liberty and confiscation. Given the Court's allowance of abortion as a marketable service allocated by a (restrictive) price mechanism, it is ambiguous and confounding that a state-controlled abortion price would present …

The International Anti-Money Laundering And The Combating The Financing Of Terrorism Regulation: A Critical Analysis Of Compliance Determinants In International Law., Navin Beekarry

Navin Beekarry

Concerns about risks of money laundering (ML) and terrorist financing (TF) to the stability of the international financial system have resurfaced in the context of the liquidity problems faced by financial institutions resulting from the recent credit crisis (2007). Because of their constantly evolving nature linked with new criminal activities and methodologies, ML and TF present threats of a systemic nature to the stability of the financial system. Addressing those changing faces of ML/TF and associated risks requires the design of a sufficiently flexible and adaptable international regulatory strategy. In this paper, I examine the international anti-money laundering and combating …

Measuring Business Damages In Fraudulent Inducement Cases, George P. Roach

George P Roach

Measuring Business Damages In Fraudulent Inducement Cases Abstract A cause of action for fraudulent inducement provides for expectancy damages and punitive damages, as well as legal fees and mental anguish in some statutory claims, prompting the Texas Supreme Court to express concern that fraudulent inducement can overwhelm other claims such as breach of contract. Litigation relating to the measure of damages for fraudulent inducement has resulted in a substantial number of cases in which juries, trial courts and courts of appeal are over-ruled or reversed. For example, in the last 30 years, more than two-thirds of the Texas Supreme Court’s …

Taking Bubbles Seriously In Contract Law, John P. Hunt

John P Hunt

This Article argues that bubbles driven by traders with poor judgment exist, can be identified on an aggregate level, and have negative effects on parties that are not involved in the bubble markets. If those premises are accepted, then failing to respect bubble contracts – rescinding bubble transactions – makes sense. Such a rule should deter the formation of bubbles. Moreover, the rule is not in serious tension with the principle of freedom of contract to the degree one might expect. The poor judgment exhibited during a bubble suggests that incapacity should, and mistake and fraud do, apply to a …

Federalism, Finality And Foreign Judgments: Examining The Ali's Proposed Federal Foreign Judgments Statute, Robert L. Mcfarland

Robert L. McFarland

The force and effect of foreign civil judgments in U.S. courts is a question of historic significance and growing importance. Presently, the question is governed by state common law. The U.S. is not party to any treaty regarding the extraterritorial force of civil judgment and recent efforts to secure bilateral and multilateral agreements on the issue have failed. The American Law Institute recently adopted a model federal statute regarding the question. The ALI’s asserts that its federal statute, if adopted, would entice foreign nations back to bargaining table and increase U.S. leverage in those negotiations.

This article examines the ALI’s …

Quagmire: Is The Sec Stuck In A Misguided War Against Pipe Financing?, Douglas Hoffer

Douglas Hoffer

A popular non-traditional capital formation option is the “PIPE” deal: Private Investment in Public Equity. Over the last ten years, companies raised more than $100 billion using PIPE transactions. The Securities and Exchange Commission (“SEC”) has increased its regulatory oversight of PIPE transactions as they have become more popular. The SEC believes that some PIPE investors who take a short position in a PIPE issuer’s publicly traded shares violate Section 5 of the Securities Act by selling unregistered securities, and that PIPE investors who trade on knowledge of an impending PIPE transaction are guilty of insider trading. The purpose of …

Illinois Mortgage Foreclosure: Problems And Solutions, John N. Oest

John N Oest

No abstract provided.

The Road To Nowhere: Caterpillar V. Usinor And Cisg Claims By Downstream Buyers Against Remote Sellers, Donald J. Smythe

Donald J. Smythe

The UN Convention on Contracts for the International Sale of Goods (CISG) was intended to unify international sales law and facilitate the expansion of international trade. It was, however, the product of a bargain between representatives from diverse legal systems and its rules are spare. This invites parties to international sales disputes to argue that its preemptive effect is narrow and that domestic legal rules should be used to fill the gaps. Courts are notoriously prone to the “homeward trend bias” and have frequently accepted such arguments. In Caterpillar v. Usinor the federal district court for the Northern District of …