Law Commons^™

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 …

The Direction Of Corporate Law: The Scholars' Perspective, John C. Coffee Jr., Richard A. Booth, R. Franklin Balotti, David C. Mcbride, Edward P. Welch

Faculty Scholarship

MR. BALOTTI: Good afternoon. My name is Frank Balotti and I've been asked to be the moderator for this afternoon's program. And one of the privileges that I get is to introduce the panel and to call them up to speak in some kind of order, I hope. And I hope that you and the audience will participate by asking questions towards the end of our panel and get involved in the discussion which we hope to promote.

The topic for this afternoon's panel is a scholar's approach to corporation law. And we are fortunate to have some scholars with …

Patterns Of Legal Change: Shareholder And Creditor Rights In Transition Economies, Katharina Pistor

Faculty Scholarship

This paper analyses changes in the legal protection of shareholder and creditor rights in 24 transition economies from 1990 to 1998. It documents differences in the initial conditions and a tendency towards convergence of formal legal rules as the result of extensive legal reforms. Convergence seems to be primarily the result of foreign technical assistance programs as well as of harmonisation requirements for countries wishing to join the European Union. The external supply of legal rules not withstanding, the pattern of legal reforms suggests that law reform has been primarily responsive, or lagging, rather than leading economic development. In comparison, …

Ratcheting Labor Standards: Regulation For Continuous Improvement In The Global Workplace, Charles F. Sabel, Dara O'Rourke, Archon Fung

Faculty Scholarship

It is a brute fact of contemporary globalization – unmistakable as activists and journalists catalog scandal after scandal – that the very transformations making possible higher quality, cheaper products often lead to unacceptable conditions of work: brutal use of child labor, dangerous environments, punishingly long days, starvation wages, discrimination, suppression of expression and association. In all quarters, the question is not whether to address these conditions, but how.

That question, however, admits no easy answers. Globalization itself has freed capital from many of its former constraints – national workplace standards, collective bargaining, and supervisory state agencies and courts – designed …

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.

A Theory Of Legal Presumptions, Antonio E. Bernardo, Eric L. Talley, Ivo Welch

Faculty Scholarship

This article analyzes how legal presumptions can mediate between costly litigation and ex ante incentives. We augment a moral hazard model with a redistributional litigation game in which a presumption parameterizes how a court 'weighs' evidence offered by the opposing sides. Strong prodefendant presumptions foreclose lawsuits altogether, but also engender shirking. Strong proplaintiff presumptions have the opposite effects. Moderate presumptions give rise to equilibria in which both shirking and suit occur probabilisitically. The socially optimal presumption trades off agency costs against litigation costs, and could be either strong or moderate, depending on the social importance of effort, the costs of …

Explaining Market Mechanisms, Thomas W. Merrill

Faculty Scholarship

In recent years, environmental regulation has seen a debate between supporters of traditional command-and-control regulation – a system of uniform pollution control standards – and proponents of a system of fees or permits for individual polluters known as market mechanisms. In this article, Professor Merrill considers two theories, wealth-maximization theory and distributional theory, that have been used to explain the emergence of market mechanisms in American environmental policy. He notes that (1) relatively few American environmental-enforcement programs have adopted market mechanisms; (2) those that exist overwhelmingly use grandfathered transferable permits instead of pollution taxes or auctioned permits; and (3) they …

Corporate Governance Lessons From Russian Enterprise Fiascoes, Merritt B. Fox, Michael A. Heller

Faculty Scholarship

This Article draws on a rich array of deviant behavior in Russian enterprises to craft lessons for corporate governance theory. First, Professors Fox and Heller define corporate governance by looking to the economic functions of the firm. Based on this definition, they develop a typology that comprehensively shows all the channels through which bad corporate governance can inflict damage on a country's real economy. Second, they explain the causes of Russian enterprise fiascoes by looking to the particular initial conditions prevailing at privatization – untenable firm boundaries and insider allocation of firm shares – and the bargaining dynamics that have …

Informality As A Bilateral Assurance Mechanism: Comments On Ronald Mann's The Role Of Letters Of Credit In Payment Transactions, Avery W. Katz

Faculty Scholarship

Ronald Mann's study of documentary defects in the presentation of commercial letters of credit1 is a valuable contribution to the commercial law literature in at least three respects. First, it offers a detailed and thorough empirical survey of an important though specialized aspect of commercial practice. Mann collected and coded a data sample of 500 randomly selected letter-of-credit transactions, personally evaluating each transaction to determine whether the documentary presentation by the beneficiary of the letter of credit (i.e., the seller) complied with the letter's formal terms. Then, for each case in which he found one or more documentary defects, Mann …

In Search Of Best Efforts: Reinterpreting Bloor V. Falstaff, Victor P. Goldberg

Faculty Scholarship

When contracting parties cannot quite define their obligations, they often resort to placeholder language, like "best efforts." They (and their counsel) likely have little idea of what they might mean, but, so long as they avoid litigation, it will not matter much. But "best efforts" clauses are on occasion litigated, and courts must read content into them. In Bloor v. Falstaff, a casebook favorite, the court held that Falstaff s lackluster promotional efforts for Ballantine beer violated its best efforts covenant. So far as I can tell, no commentators have questioned this outcome. Indeed, some commentators have found Falstaff …

Critical Approaches To Property Institutions, Michael A. Heller

Faculty Scholarship

Private property is a rather elusive concept. Any kid knows what it means for something to be mine or yours, but grownup legal theorists get flustered when they try to pin down the term. Typically they, actually we, turn to a familiar analytic toolkit: including, for example, Blackstone's image of private property as "sole and despotic dominion"; Hardin's metaphor of the "tragedy of the commons"; and, more generally, the division of ownership into a trilogy of private, commons, and state forms. While each analytic tool has a distinguished pedigree and certain present usefulness, each also imposes a cost because it …