Commercial Law Commons^™

American Conflicts Scholarship And The New Law Merchant, Friedrich K. Juenger

Vanderbilt Journal of Transnational Law

Professor Juenger argues that both the unilateralist and the multilateralist schools of thought share a fixation on the idea that law must emanate from the power of a sovereign state. The author points out that such a view of law is a historic; that, in the past, merchants relied on a substantive body of supranational rules that transcended national borders. This Article discusses the contemporary significance of the law merchant for law professors, law students, and practitioners.

The author explains how the practices of contemporary transnational commercial enterprises, as well as the opinions of contemporary scholars , support the idea …

Free Trade And The Regulatory State: A Gatts-Eye View Of The Dormant Commerce Clause, Daniel A. Farber, Robert E. Hudec

Vanderbilt Law Review

At one time, federalism may have seemed a peculiarly American institution. Today, however, we can see federalism as a special case of the more general problem of allocating power among geographic units. Problems of federalism arise in structures as large as the European Union' and the even larger global trade system under the General Agreement on Tariffs and Trade ("GATT").

Free trade increasingly is accepted as a value internationally, as it always has been for commerce within the United States. Yet, both internationally and domestically, free trade must accommodate the reality of the modern regulatory state-a state that shows little …

Extraterritorial Application Of Title Vii: The Foreign Compulsion Defense And Principles Of International Comity, Mary C. St. John

Vanderbilt Journal of Transnational Law

With an increasing number of United States corporations locating and affiliating overseas and United States citizens seeking employment with multinational corporations, the debate over the extraterritorial application of United States discrimination laws has attracted greater international attention. The 1991 amendment to Title VI1 of the Civil Rights Act of 1964, which prohibits discrimination in employment on the basis of race, religion, sex, or national origin, specifically provides for extraterritorial application of Title Vii. The foreign compulsion defense, however, limits the scope of Title VII's application abroad and raises the issue of whether U.S. corporations can claim this defense when foreign …

The Commercial Real Estate Laws Of The People's Republic Of China And Shenzhen: An Overview, David S. Kerzner

Vanderbilt Journal of Transnational Law

This Article surveys the changes in real estate laws that have occurred in China since 1980. It provides a comprehensive and specific overview of the foreign investment process, which should prove particularly useful to United States investors. The Article first provides general background on the evolution of Chinese real estate law, focusing on the granting and subsequent alienation of land use rights, as well as the recent development in the area of large parcels of land. The Article then examines the current state of real estate law in Guangdong Province, specifically in Shenzhen, and explains details such as transfer and …

Judicial Review Of Defensive Tactics In Proxy Contests: When Is Using A Rights Plan Right?, Randall Thomas

Vanderbilt Law School Faculty Publications

Proxy contests have reemerged recently as an important part of the market for corporate control. After years of indifference to corporate elections, dissident shareholders have turned once again to the bal- lot box as a means of removing unwanted management. In a surprisingly large number of these battles, the challengers have succeeded in getting all or much of what they wanted." The resurgence of proxy contests has sparked renewed interest by incumbent managements in developing powerful new defensive tactics in corporate elections. Incumbents' time-honored campaign strategies, such as switching the annual shareholders' meeting date, or restricting the potential candidates who …

Product Liability, Research And Development, And Innovation, W. Kip Viscusi, Michael J. Moore

Vanderbilt Law School Faculty Publications

Product liability ideally should promote efficient levels of product safety, but misdirected liability efforts may depress beneficial innovations. This paper examines these competing effects of liability costs on product R & D intensity and new product introductions by manufacturing firms. At low to moderate levels of expected liability costs, there is a positive effect of liability costs on product innovation. At very high levels of liability costs, the effect is negative. At the sample mean, liability costs increase R & D intensity by 15 percent. The greater linkage of these effects to product R & D rather than process R …

A Theoretic Analysis Of Corporate Auctioneers Liability Regimes, Randall Thomas, Robert G. Hansen

Vanderbilt Law School Faculty Publications

In Schneider v. Lazard Freres & Co. a New York appellate court greatly expanded the liability of investment advisers working as corporate auctioneers. Under this new legal regime, auctioneer/advisers accused of simple negligence are exposed to billions of dollars of potential legal liabilities. This article first reviews the existing law covering auctioneer/advisers and shows that the Schneider decision conflicts with the law governing general auctioneers and with the law governing the role of advisers and directors during the sale of the corporate control. Next, using an auction-theoretic framework, this Article shows that Schneider will likely result in: (1) increased indemnification …

Book Review: The Law And Regulation Of International Finance, Ian F.G. Baxter

Vanderbilt Journal of Transnational Law

The Law of International Finance, as its opening states, revolves around "the law and regulation affecting the raising of finance in the international financial markets." Thus, the book is about a very specialized area of finance and law-an area that has come into prominence, or even existence, only during the last two decades. As a solicitor in a large London firm that does substantial work related to financial business in the London international capital markets, Ravi Tennekoon has had considerable practical experience in legal work related to Eurobond issues and transactions and international syndications. London is, of course, the main …

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

This CASE DIGEST provides brief analyses of cases that represent current aspects of transnational law. The Digest includes cases that establish legal principles and cases that apply established legal principles to new factual situations. These cases are grouped in topical categories and references are given for further research.

Eastern Europe: Observations And Investment Strategies, Marek Wierzbowski

Vanderbilt Journal of Transnational Law

It is my impression that right now an American lawyer has no problem getting acquainted with East European laws concerning foreign investment. There are so many translations now in this country that almost every new law is immediately translated into English. The American lawyer can get to this text at almost the same time as the East European lawyer can get to it.

So it is very easy to get acquainted with legal texts of the most important laws from the point of view of foreign investors, but there are some traps. And it is my impression that when lawyers …

Considering Business Opportunities In The Soviet Union In The 1990s, Richard N. Dean

Vanderbilt Journal of Transnational Law

The purpose of this Essay has been to provide, in somewhat summary fashion, basic background and guidelines to assist Western companies that are considering commercial transactions in the Soviet Union. It was not intended to be an exhaustive analysis of all factors that may affect the negotiation, completion and implementation of commercial transactions in the Soviet Union. Rather, we have drawn from our experience in assisting our clients over the last three years in the USSR and have attempted to provide an appropriate context for the consideration of potential business opportunities.

In our experience, the most effective perspective to adopt …

Consideration And The Commercial-Gift Dichotomy, James D. Gordon, Iii

Vanderbilt Law Review

The doctrine of consideration serves several functions. For example, it serves a cautionary function because it helps ensure deliberateness. Often, promises to make gifts are based on emotion, surges of gratitude, or impulses of display.' A donative promisor tends to look primarily to the promisee's interests rather than the promisor's own interests. The commercial-gift dichotomy satisfies the cautionary function better than the doctrine of consideration because it distinguishes between transactions based on self-interest, in which the promisor can be presumed to self-protect, and transactions based on altruism, in which the promisor is thinking more about the donee's interests than his …

Opportunism And Trust In The Negotiation Of Commercial Contracts: Toward A New Cause Of Action, G. Richard Shell

Vanderbilt Law Review

In a complex economy, many business transactions take place sequentially-one party performs in part or in full before the other side executes its side of the bargain. Sequencing has many advantages, but it creates an unfortunate incentive. Having received its benefit from the bargain, the party who is to perform last may be tempted to renege on its obligations. Law and economics scholars often describe the conduct of a reneging party in these situations as "opportunistic." The reneging party, perceiving an opportunity to increase its gain, yields to temptation and refuses to perform. The law of contract helps to diminish …

Book Review, Richard Gruner

Vanderbilt Journal of Transnational Law

Large corporations are important, yet enigmatic, participants in world commerce. International corporate behavior is morally and legally significant because of its immense scope and societal impact. That behavior, however, is often so complex as to defy characterization under the simple moral or legal standards applicable to individuals. Furthermore, the ability of traditional moral or legal systems to shape multinational corporate conduct is also unclear given that large corporate bureaucracies lack the motivations and fears normally used to enforce moral or legal accountability. As one frustrated court noted, the problem is that corporations have "no soul to damn, and no body …

Introductory Remarks And A Comment On Civil Rico's Remedial Provisions, Robert K. Rasmussen

Vanderbilt Law Review

This Symposium comes at a very opportune time. RICO seems to be on everyone's mind. The attention that RICO has garnered in the last few years in the courts, the press, and the legal academy has in-creased steadily, and the cries for change, at least from some quarters,have become deafening. Judge David Sentelle of the D.C. Circuit Courtof Appeals recently labeled RICO "The Monster That Ate Jurisprudence;" Chief Justice William Rehnquist has repeatedly called for a defederalization of RICO; and groups as diverse as the Wall Street Journal, the Washington Post, and the American Civil Liberties Union have argued vociferously …

Substantive Consolidation In Bankruptcy: A Primer, J. Stephen Gilbert

Vanderbilt Law Review

Substantive consolidation is a powerful vehicle in bankruptcy by which the assets and liabilities of one or more entities are combined and treated for bankruptcy purposes as belonging to a single enterprise.Because substantive consolidation vitally affects the rights and interests of parties involved in bankruptcy proceedings, it is termed a matter"pregnant with consequence"' and should be used with caution. Substantive consolidation is not a common occurrence because it exacts strict requirements in order to protect the parties that it affects. Be-cause substantive consolidation lacks clear statutory guidance, however,courts examine the facts of each case closely to ascertain whether consolidation is …

Special Project: Lender Liability, Journal Staff

Vanderbilt Law Review

In recent years banks and other commercial lending institutions have faced a rapid increase in problem loans.' At the same time, the relatively new phenomenon in United States law known as "lender liability" has signaled an expansion of the legal theories under which courts may find lenders liable for damages incurred by borrowers. Perhaps most significantly, many courts now allow borrowers to recover against lenders based on various tort theories. Because of the broader remedies afforded under tort theories as compared to those remedies previously available in contract, some lenders recently have experienced large adverse verdicts. If courts continue to …

"Bad Faith Breach": A New And Growing Concern For Financial Institutions, Susan D. Gresham

Vanderbilt Law Review

A majority of courts have determined that all contracts impose on the parties to the contract an implied covenant of good faith and fair dealing in their actions with each other. This implied covenant prohibits a contracting party from injuring another party's right to receive the benefits of the agreement. Breach of this implied covenant usually creates a cause of action based on contract rights. Moreover, California courts maintain that breach of the implied covenant of good faith and fair dealing creates a tort action as well. The California courts initially limited these tort actions to claims against insurance companies. …

The Death Of Ideology In Soviet Foreign Investment Policy, Christopher Osakwe

Vanderbilt Journal of Transnational Law

This Article's primary thesis is that the Soviet Government's decision to permit the creation of international joint ventures in the Soviet Union is a major instrument of the policy of perestroika. As such, the stability and profitability of any international commercial joint enterprise in the Soviet Union is inextricably linked with the fate of perestroika. If perestroika succeeds, the Soviet Union will have a market-oriented socialist economy, fully integrated into the world economy. By virtue of this success, Western investors and entrepreneurs will be in a position to make deeper, more profitable, and more lasting inroads into the Soviet economy. …

Shareholder Rights Plans: Shields Or Gavels?, Patrick J. Thompson

Vanderbilt Law Review

Since 1980 corporate takeover transactions have increased dramatically in size and volume.' Along with the rise in acquisition activity has come a marked increase in the number of contested or hostile take-overs. The proliferation of hostile bids for corporate control' has brought about the development of new offensive and defensive take-over tactics. One of the newest defensive devices is known as a "poison pill," or shareholder rights plan. This device is designed to make the target corporation (target) prohibitively expensive to an acquiring corporation (acquiror) in the event of a hostile takeover or tender offer.'Since the 1985 decision in Moran …

Continuation Of The Affiliated Group Subsequent To A Divisive Reorganization: A Patchwork Of Inconsistent Rules With Uncertain Application, Matthew B. Krasner

Vanderbilt Law Review

Corporations comprising an affiliated group may elect to file a consolidated tax return. However, once such an election is made, the affiliated group may not discontinue such filing in subsequent years with out the prior consent of the Commissioner of the Internal Revenue Service(IRS).' The continuous filing requirement is necessary to prevent the abuses that would occur if corporations within an affiliated group could choose whether to file separate returns or a consolidated return for a given year. A complex set of regulations specify under what circumstances the Commissioner will consider an affiliated group as continuing in existence so as …

Trends In First Amendment Protection Of Commercial Speech, Mary B. Nutt

Vanderbilt Law Review

Recent Development:

The first amendment guarantees that "Congress shall make no law... abridging the freedom of speech or of the press."' Over the past few decades, the Supreme Court has applied the first amendment to commercial speech only sporadically. The Court has vacillated between refusing to apply the first amendment, liberally extending first amendment guarantees,4 and applying limited first amendment protections to commercial speech.' This expansion and contraction of first amendment protection stems partly from three factors: (1) the Court's characterization of the speech at issue as commercial or noncommercial, (2) the Court's perception of the relevant regulation as content-based …

Bailor Beware: Limitations And Exclusions Of Liability In Commercial Bailments, A. Darby Dickerson

Vanderbilt Law Review

Although people enter into bailment agreements every day, the diversity and significance of bailments generally are unknown to lay persons and ignored by lawyers. This neglect stems in part from the antiquity of bailment and from its overlap with other branches of the law.' One commentator has stated that "bailment stands at the point at which contract, tort, and property law converge," representing a contractual conveyance of personal property that is enforceable in tort. Although bailment draws from other areas of the law, it retains a separate legal personality whose independent character has yet to be fully explored.The term "bailment," …

The Chaos Of The "Battle Of The Forms": Solutions, John E. Murray, Jr.

Vanderbilt Law Review

Whatever may be said of the lack of certainty, stability, and predictability in many areas of the law, chaos rarely is discovered. Unfortunately, we have now reached that point in matters involving attempts by innumerable buyers and sellers to make contracts through an exchange of printed forms. Because printed forms will continue to be the written evidence of the overwhelming majority of attempted contracts in America,' this chaos threatens the institution of contract in our society. There should be no doubt that"chaos" is an accurate characterization of the state of the law in the "battle of the forms" arena. Courts …

The Interaction Of Articles 6 And 9 Of The Uniform Commercial Code: A Study In Conveyancing,Priorities, And Code Interpretation, Steven L. Harris

Vanderbilt Law Review

By 1940, the National Conference of Commissioners on Uniform State Laws no longer was content to revise the then existing uniform acts that related to commercial transactions., Rather, the National Conference joined with the American Law Institute in an effort to promulgate proposed new legislation containing principles, policies, and definitions common to a number of separate aspects of mercantile commerce, including the sale and financing of goods and methods of payment. Like all human creations, the resulting product-the Uniform Commercial Codes--imperfectly achieved the goals of its sponsors. In particular, important questions have arisen about the proper interplay among various articles …

Private International Law As A Means To Control The Multinational Enterprise, Dimitris Tzouganatos

Vanderbilt Journal of Transnational Law

This Article explores the different approaches taken by the academic and judicial communities of Germany and the United States in their respective attempts to derive the optimal legal policy to deal with the multinational enterprise phenomenon. It attempts to assess the success of the Private International Law method as applied in most European countries by examining whether its criteria are operational and a reflection of economic reality. The Article also analyzes whether application of such criteria ensures the enforcement of the policies of the forum. It concludes by questioning whether the Private International Law approach is a viable alternative to …

Merger And Acquisition Activities In Japan: The Present And The Future, Mitsuru Misawa

Vanderbilt Journal of Transnational Law

Merger and acquisition are expected to generate increasing interest in industrial circles throughout Japan. Those who argue in favor of mergers and acquisitions emphasize that these activities will help rejuvenate the economy of Japan through the revitalization of corporate management and the efficient reallocation of resources. Some commentators are strongly in favor of takeover bids and argue that aggressive takeover bids will lead to the revitalization of the individual corporations targeted for acquisition through the arousal of top officials of the targets.

Critics charge, on the other hand, that only raiders, lawyers and speculators find takeover bids profitable. Some complain …

Books Received, Law Review Staff

Vanderbilt Journal of Transnational Law

Books Received

The Utilization of Nuclear Energy and International Law By Vanda Lamm Atlantic Highlands, New Jersey: Humanities Press International, Inc. 1984 Pp. 151. $29.95

War, Foreign Affairs, and Constitutional Power By Henry Bartholomew Cox Cambridge, Massachusetts: Ballinger,1984. Pp. xx, 331 $35.00

Guidelines For International Election Observing Prepared by Larry Garber Washington, D.C.: The International Human Rights Law Group, 1984. Pp. iii, 90. $7.95

International Codes and Multinational Business: Setting Guidelines for International Business Operations By John M. Kline Westport, Connecticut: Qurom Books, 1985Pp. vi, 184. $35.00

Public Enterprises in Mixed Economies: Some Macroeconomic Aspects By Robert H. Floyd, Clive …

Perspectives On Foreign Investment In The Southeastern United States: An Introduction, Harold V. Morgan, Jr.

Vanderbilt Journal of Transnational Law

International practice in the Southeast is primarily divided between representation of industrial and business investors and representation of real estate investors. In both cases, the legal skills required are those necessary to represent domestic clients engaged in the same activities, with an overlay of specialized expertise. For example, closing a real estate purchase on behalf of a foreign purchaser involves the same elements of real estate practice as any domestic purchase and sale. If the purchaser is foreign, however, the lawyer must consider the applicability of tax treaties, Internal Revenue Code provisions governing repatriation of real estate income, various state …

An Evaluation Of Current Trends In Foreign Direct Investment In The Southeast United States, Dr. Cedric L. Suzman, J. Alexander Heslin

Vanderbilt Journal of Transnational Law

Direct investment in the United States by foreigners exceeded direct investment abroad by Americans for the first time in 1981. This development continued in subsequent years. The inflow of capital has clearly resulted in economic growth and added employment. Moreover, the inflow of foreign investment capital has supplemented comparatively low levels of United States savings" and helped increase investment in new plant and equipment--essential for future productivity growth.

The inflow can be expected to continue at high rates as long as the United States economy continues to grow. A real crisis of confidence in the dollar may prove to be …