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Full-Text Articles in Law
Moral Diversity And Efficient Breach, Matthew A. Seligman
Moral Diversity And Efficient Breach, Matthew A. Seligman
Michigan Law Review
Most people think it is morally wrong to breach a contract. But sophisticated commercial parties, like large corporations, have no objection to breaching contracts and paying the price in damages when doing so is in their self-interest. The literature has ignored the profound legal, economic, and normative implications of that asymmetry between individuals’ and firms’ approaches to breach. To individuals, a contract is a promise that cannot be broken regardless of the financial stakes. For example, millions of homeowners refused to breach their mortgage contracts in the aftermath of the housing crisis even though doing so could have saved them …
Consumer Preferences For Performance Defaults, Franklin G. Snyder, Ann M. Mirabito
Consumer Preferences For Performance Defaults, Franklin G. Snyder, Ann M. Mirabito
Michigan Business & Entrepreneurial Law Review
Commercial law in the United States is designed to facilitate private transactions, and thus to enforce the presumed intent of the parties, who generally are free to negotiate the terms they choose. But these contracts inevitably have gaps, both because the parties cannot anticipate every situation that might arise from their relationship, and because negotiation is not costless. When courts are faced with these gaps in a litigation context, they supply default terms to fill them. These defaults usually are set to reflect what courts believe similar parties would have agreed to if they had addressed the issue. These “majoritarian” …
Legal Entities As Transferable Bundles Of Contracts, Kenneth Ayotte, Henry Hansmann
Legal Entities As Transferable Bundles Of Contracts, Kenneth Ayotte, Henry Hansmann
Michigan Law Review
The large, modern business corporation is frequently organized as a complex cluster of hundreds of corporate subsidiaries under the common control of a single corporate parent. Our Article provides new theory and supportive evidence to help explain this structure. We focus, in particular on the advantages of subsidiary entities in providing the option to transfer some or all of the firm's contractual rights and obligations in the future. The theory not only sheds light on corporate subsidiaries but also illuminates a basic function of all types of legal entities, from partnerships to nonprofit corporations. We show that when, as is …
Arbitration Costs And Forum Accessibility: Empirical Evidence, Christopher R. Drahozal
Arbitration Costs And Forum Accessibility: Empirical Evidence, Christopher R. Drahozal
University of Michigan Journal of Law Reform
In this Article, written for this symposium issue on "Empirical Studies of Mandatory Arbitration," I examine the available empirical evidence on these two questions. I take "mandatory arbitration" to refer to pre-dispute arbitration clauses in consumer and employment (and maybe franchise) contracts. Accordingly, I limit my consideration of the empirical evidence to those types of contracts. I do not discuss empirical studies of international arbitrations, which almost always arise out of agreements between commercial entities. Nor do I discuss empirical studies of court-annexed arbitrations, which may not derive from party agreement and do not ordinarily proceed to a binding award.
Residential Tenants And Their Leases: An Empirical Study, Warren Mueller
Residential Tenants And Their Leases: An Empirical Study, Warren Mueller
Michigan Law Review
Of particular interest is the application of this theory to residential leases, a classic example of the standard long-form contract. An abundance of traditional legal research and commentary has been devoted to the problem of disparity of bargaining power between the parties to a standard-form residential lease. The commentators have consistently called for reform measures to combat this problem. In order to adopt sensible and effective reform measures, however, it is first necessary to obtain factual data with which to test and clarify the reformers' underlying assumptions. Such data is virtually nonexistent, since, prior to the study described in this …