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Full-Text Articles in Law

Why Choose Ltas? An Empirical Study Of Ohio Manufacturer’S Contractual Choices Through A Bargaining Lens, Juliet P. Kostritsky, Jessica Ice Jan 2020

Why Choose Ltas? An Empirical Study Of Ohio Manufacturer’S Contractual Choices Through A Bargaining Lens, Juliet P. Kostritsky, Jessica Ice

Faculty Publications

This paper contributes to recent scholarship regarding Long Term Agreements (LTAs) by providing empirical evidence that suppliers are more likely to undertake the costs of an LTA if the transaction requires significant capital expenditures or the potential for large sunk costs. Through a survey of a random group of 63 Ohio supplier/manufacturers, the paper explores why supplier/manufacturers with a full range of contractual and non-contractual solutions might choose one set of arrangements over others. It then seeks to link its findings to a broader theory of how parties bargain to solve durable problems under conditions of uncertainty, sunk ...


A Bargaining Dynamic Transaction Cost Approach To Understanding Framework Contracts, Juliet P. Kostritsky Jan 2018

A Bargaining Dynamic Transaction Cost Approach To Understanding Framework Contracts, Juliet P. Kostritsky

Faculty Publications

This Article takes a different approach. It draws on the literature of these scholars but suggests that another way to understand the arrangements parties enter into in a variety of settings to purchase or sell goods or to innovate on a product or drug can best be understood in terms of a bargaining dynamic that looks at how the private interests of the parties are turned into joint interests in the agreement reached. It is a mistake to talk about the form of a contract without first understanding the bargaining needs and positions of the parties and how those needs ...


Contract Design And The Shading Problem, Robert E. Scott Jan 2015

Contract Design And The Shading Problem, Robert E. Scott

Faculty Scholarship

Despite recent advances in our understanding of contracting behavior, economic contract theory has yet to identify the principal causes and effects of contract breach. In this Essay, I argue that opportunism is a primary explanation for why commercial parties deliberately breach their contracts. I develop a novel variation on opportunism that I identify as “shading;” a behavior that more accurately describes the vexing problems courts face in rooting out strategic behavior in contract litigation. I provide some empirical support for the claim that shading behavior is both pervasive in litigation over contract breach and extremely difficult for generalist courts to ...


The "Branding Effect" Of Contracts, D. Gordon Smith Apr 2006

The "Branding Effect" Of Contracts, D. Gordon Smith

Faculty Scholarship

In his case study of the MasterCard IPO and its predecessor piece on the Google IPO, Victor Fleischer claims to find evidence of a branding effect of legal infrastructure. The branding effect is not aimed at reducing the potential for opportunism by a counterparty to a contract, but rather at increasing the attractiveness of a product to present and future users or improving the image of a company in the eyes of regulators, judges, and juries. In this essay commenting on Fleischer's work, I endorse the notion that deal structures have branding effects and position Fleischer's work within ...


The Return Of Bargain: An Economic Theory Of How Standard Form Contracts Negotiation Between Businesses And Consumers, Jason S. Johnston Mar 2006

The Return Of Bargain: An Economic Theory Of How Standard Form Contracts Negotiation Between Businesses And Consumers, Jason S. Johnston

Faculty Scholarship at Penn Law

This paper analyzes standard form contracts between firms and individual consumers (and borrowers). It presents a mix of anecdotal and empirical evidence from a large number of industries demonstrating a widespread pattern in which firms refrain from enforcing the typically clear bright line performance obligations that such standard form contracts set out (such as a consumer credit repayment terms, or a retail consumer's right to return goods). Instead, firms routinely give their supervisory employees the discretion to bargain around such terms. Within a simple and informal model, the paper explains such delegated, discretionary renegotiation as a means by which ...


Judicial Incorporation Of Trade Usages: A Functional Solution To The Opportunism Problem, Juliet P. Kostritsky Jan 2006

Judicial Incorporation Of Trade Usages: A Functional Solution To The Opportunism Problem, Juliet P. Kostritsky

Faculty Publications

Article 2 of the UCC directed courts to look to business norms as a primary means of interpreting contracts. Recently the new formalists have attacked this strategy of norm incorporation as a misguided one that will lead inevitably to significant error costs. Accordingly, they have embraced plain meaning as the preferred interpretive strategy. This article argues that the strategy of rejecting trade usages unless they are part of the express contract is too rigid. The rejection is premised on an overly narrow cost/benefit analysis that fails to account for the functional role that such usages may play in curbing ...


The Exit Structure Of Strategic Alliances, D. Gordon Smith Apr 2005

The Exit Structure Of Strategic Alliances, D. Gordon Smith

Faculty Scholarship

Today, many biotechnology firms use strategic alliances to contract with other companies. This article contends that the governance structure of these alliances - specifically, the contractual board - provides an integrated restraint on opportunism. While an alliance agreement's exit structure could provide a check on opportunism by allowing the parties to exit at will, such exit provisions also can be used opportunistically. Most alliance agreements, therefore, provide for contractual lock in of the alliance partners, with only limited means of exit. Lock in, of course, raises its own concerns, and the contractual board - which typically is composed of representatives from each ...


Reciprocal Fairness, Strategic Behavior & Venture Survival: A Theory Of Venture Capital-Financed Firms, Manuel A. Utset Jan 2002

Reciprocal Fairness, Strategic Behavior & Venture Survival: A Theory Of Venture Capital-Financed Firms, Manuel A. Utset

Scholarly Publications

No abstract provided.


Tax Transitions, Opportunistic Retroactivity, And The Benefits Of Government Precommitment, Kyle D. Logue Jan 1996

Tax Transitions, Opportunistic Retroactivity, And The Benefits Of Government Precommitment, Kyle D. Logue

Articles

What if the current federal income tax laws were repealed and replaced with a simple flat tax? What if the entire Internal Revenue Code (with its graduated rates and countless deductions, exclusions, and credits) were scuttled in favor of a broad-based consumption tax? Only a few years ago, such proposals would have seemed radical and extremely unlikely to be adopted. But times are changing. Calls for a drastic overhaul of the Internal Revenue Code have become commonplace, even at the highest levels in the tax-policy community. In addition, proposals that would replace the income tax with a flat-rate broad-based consumption ...