Law Commons^™

Legal Entities As Transferable Bundles Of Contracts, Kenneth Ayotte, Henry Hansmann

Kenneth Ayotte

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 …

Opportunism As Crucible: Rethinking Equity In View Of Reliance Interests And Legal Evolution, John Ehrett

John Ehrett

This Article offers and defends a nuanced definition of opportunism in the context of legal decision-making by differentiating between opportunism in the broad sense and the particularized phenomenon of cognizably malignant opportunism. It subsequently proceeds by developing a normative critique of the case for broader invocation of counter opportunistic equitable remedies, alongside a defense of the reliance and gap-filling functions performed by opportunistic actors. Centrally, I challenge the suggestion that the existence of opportunism in private law warrants a revival of the doctrines of ex post equity. I argue instead that opportunism serves an important structural purpose where the evolution …

Rummaging Through The Bottom Of Pandora’S Box: Funding Predatory Pricing Through Contemporaneous Recoupment, Shaun D. Ledgerwood, Wesley J. Heath

Shaun D. Ledgerwood

Predatory pricing doctrine is currently a dead area of the law. To proceed beyond summary judgment, a plaintiff must prove the predation created a "dangerous probability" of supracompetitive pricing as the mechanism for recouping the losses “invested” in the predation. This requires proof that the predator sold products below its average variable cost and raised an entry barrier that ultimately enabled the recoupment of profits at some later time. We offer an alternative to this two-phased recoupment model. In this paper we show that a multiproduct retailer can target loss leading behavior in a market segment to punish or eliminate …

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 …

Interpretive Risk And Contract Interpretation: A Suggested Approach For Maximizing Value, Juliet P. Kostritsky

Juliet P Kostritsky

• The Article offers a theory of judicial intervention and interpretation in Contracts. It posits that the principal objective of courts interpreting, supplementing, or overriding terms is to ask whether such intervention can serve the broad objective of maximizing gains from trade while minimizing transaction costs and the costs of opportunism, collectively, an interpretive risk. It offers an economic rationale for a broad approach to interpretation and explores several examples from Contract law where courts depart from the parties’ textual choices and follow the theory suggested in this Article. These examples directly challenge the theory of the new formalists.

Interpretive Risk And Contract Interpretation: A Suggested Approach For Maximizing Value, Juliet P. Kostritsky

Juliet P Kostritsky

• The Article offers a theory of judicial intervention and interpretation in Contracts. It posits that the principal objective of courts interpreting, supplementing, or overriding terms is to ask whether such intervention can serve the broad objective of maximizing gains from trade while minimizing transaction costs and the costs of opportunism, collectively, an interpretive risk. It offers an economic rationale for a broad approach to interpretation and explores several examples from Contract law where courts depart from the parties’ textual choices and follow the theory suggested in this Article. These examples directly challenge the theory of the new formalists.

Interpretive Risk And Contract Interpretation: A Suggested Approach For Maximizing Value, Juliet P. Kostritsky

Juliet P Kostritsky

• The Article offers a theory of judicial intervention and interpretation in Contracts. It posits that the principal objective of courts interpreting, supplementing, or overriding terms is to ask whether such intervention can serve the broad objective of maximizing gains from trade while minimizing transaction costs and the costs of opportunism, collectively, an interpretive risk. It offers an economic rationale for a broad approach to interpretation and explores several examples from Contract law where courts depart from the parties’ textual choices and follow the theory suggested in this Article. These examples directly challenge the theory of the new formalists.

The Means/Ends Dilemma In Contract Interpretation: A Response To Professors Kraus And Scott: How The Intractability Of Express Language Affects Interpretive Authority And Legal Interventions In Contracts, Juliet P. Kostritsky

Juliet P Kostritsky

In their recent article on Contract Design and Intent, Professors Jody Kraus and Robert Scott offer a new justification for literal enforcement of the parties’ chosen terms and for ignoring the contract’s objectives. Their argument depends on a theory of how parties trade off front end and back end costs. Kraus and Scott posit that if parties use specific terms, and fail to use open-ended terms, they have chosen to exclude courts from broadly interpreting the contract or going beyond the chosen means. As such, courts should rigorously adhere to the parties’ explicit contractual means and spurn any judicial strategy …

The Means/Ends Dilemma In Contract Interpretation: A Response To Professors Kraus And Scott: How The Intractability Of Express Language Affects Interpretive Authority And Legal Intervention In Contracts, Juliet P. Kostritsky

Juliet P Kostritsky

In their recent article on Contract Design and Intent, Professors Jody Kraus and Robert Scott offer a new justification for literal enforcement of the parties’ chosen terms and for ignoring the contract’s objectives. Their argument depends on a theory of how parties trade off front end and back end costs. Kraus and Scott posit that if parties use specific terms, and fail to use open-ended terms, they have chosen to exclude courts from broadly interpreting the contract or going beyond the chosen means. As such, courts should rigorously adhere to the parties’ explicit contractual means and spurn any judicial strategy …

The Means/Ends Dilemma In Contract Interpretation: A Response To Professors Kraus And Scott: How The Intractability Of Express Language And Uncertainty Affects Legal Interventions In Contracts, Juliet P. Kostritsky

Juliet P Kostritsky

In their recent article on Contract Design and Intent, Professors Jody Kraus and Robert Scott offer a new justification for such a literal enforcement of the parties’ chosen terms and for ignoring contractual objectives. Their argument depends on a theory of how parties bargain and trade off front end and back end costs. Kraus and Scott posit that if parties have invested enough transaction costs to result in specific terms, and failed to delegate decision-making to a court through open-ended terms, they have a deliberately chosen to exclude courts. In such cases courts should rigorously adhere to the explicit contractual …

Opportunism, Uncertainty, And Relational Contracting - Antitrust Rules In The Film Industry, Ryan M. Riegg

Ryan M. Riegg

Opportunism, Uncertainty, And Relational Contracting - Antitrust Rules In The Film Industry, Ryan M. Riegg

Ryan M. Riegg

Plain Meaning Vs. Broad Interpretation: How The Risk Of Opportunism Defeats A Unitary Default Rule For Interpretation, Juliet P. Kostritsky

Juliet P Kostritsky

Plain Meaning vs. Broad Interpretation: How the Risk of Opportunism Defeats a Unitary Default Rule for Interpretation Juliet P. Kostritsky, Case Western Reserve Abstract This essay argues that it is the wrong to think that courts must make a dichotomous choice always to prefer extrinsic evidence or always to exclude it. Sometimes the appropriate interpretive methodology should explicitly forego extrinsic evidence while at other times it should embrace extrinsic evidence. The choice between the two methodologies should depend upon an assessment in each case about which interpretive methodology is most likely to (1) curb opportunistic behavior; and (2) and implement …

Values, Pierre Schlag

Pierre Schlag

No abstract provided.