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Economic Reasoning And The Framing Of Contract Law: Sale Of An Asset Of Uncertain Value, Victor P. Goldberg
Economic Reasoning And The Framing Of Contract Law: Sale Of An Asset Of Uncertain Value, Victor P. Goldberg
Faculty Scholarship
By analyzing two American contract law decisions, the paper illustrates the usefulness of economic analysis in framing the inquiry. The cases have a common feature, unrecognized by the courts: they both deal with the production and transfer of information regarding the sale of an asset of uncertain value. One involves the combination of an option and a lockup to encourage the buyer to produce information. The other involves contingent compensation to convey the seller's assurance of the quality of the assets. Once this is recognized, the outcomes are straightforward.
Trade Secrets And Mutual Investments, Gillian L. Lester, Eric L. Talley
Trade Secrets And Mutual Investments, Gillian L. Lester, Eric L. Talley
Faculty Scholarship
This paper employs an optimal contracting framework to study the question of how courts should adjudicate disputes over valuable trade secrets (such as customer lists). We focus principally on contexts where trade secrets are formed endogenously, through specific, non-contractible investments that could potentially come from either employers or employees (or both). Within such contexts, we argue, an "optimal" trade secret law diverges in many important respects from existing doctrine. In particular, an optimal doctrine would (1) expressly consider the parties' relative skills at making value enhancing investments rather than the mere existence of a valuable informational asset; (2) tend to …