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Open Access. Powered by Scholars. Published by Universities.®

Columbia Law School

1999

Banking and Finance Law

Georgetown Law Journal

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Full-Text Articles in Law

Verification Institutions In Financing Transactions, Ronald J. Mann Jan 1999

Verification Institutions In Financing Transactions, Ronald J. Mann

Faculty Scholarship

One of the most common problems in commercial transactions is the resolution of information asymmetries, situations in which one party to the transaction knows more about a relevant fact than the other party. The natural response of the disadvantaged party is to attempt to investigate the transaction for itself – to investigate the matter with "due diligence" – but often such an investigation will be expensive and, however diligently undertaken, leave the truth of the matter uncertain. A law-centered approach to the problem would call for the development of warranties and covenants that the party with superior information would give to the ...