Favorable Contract Research Articles

Contracts in Favour of Third Persons in Europe: First Steps Toward Tomorrowâ??s Harmonization

Abstract: This article discusses how the contract in favour of a third person made its way onto the European scene. It suggests why the practical advantages and efficiencies of the contract finally outweighed the traditional law’s attachment to the principles of privity and relativity of contract. The discussion then describes the various analogies, false leads, and inventive approaches that jurists pursued in their search for a coherent account of the institution. The article also attempts to compare, contrast, and evaluate current European approaches at codification and harmonization, including the recent contributions made by the Lando Principles of European Contract Law and the Gandolfi European Code of Contract. For comparative purposes the evaluation centres around four essential issues in the beneficiary puzzle and assesses to what extent a set of common principles or rules has developed in Europe. It is discovered that the principal areas in which the legal systems do not entirely agree are the methods to determine the favoured beneficiary, the point when the beneficiary’s rights arise, the power of revocation, and the perfection of revocations. The conclusion is that while this institution is recognized as valid in all European legal systems, Europe has not as yet developed a completely coherent account of the subsidiary rules. A foundation for an eventual harmonization certainly exists, but further study and reflection will be needed to deal with these questions.

Payor contracts: The good, the bad, and the ugly

Once again, it is time for me to get on my soapbox and preach the doctrine of fiscal responsibility. In this piece, we will investigate the advantages and disadvantages of having a contract with an insurance payor for the coverage of air medical services. We then will discuss elements you may wish to incorporate into the contract to protect your bottom line. Finally, we will address how you can get payors to negotiate a favorable contract.

Outpatient endoscopy. The case for the ambulatory surgery center.

Since the late 1970s, there has been a dramatic shift of GI endoscopy services from the inpatient to the outpatient setting. Outpatient GI endoscopy has migrated from the hospital endoscopy unit to the office and then on to the EASC. This evolution has been brought about by many forces, including the drive for health care cost containment, a desire for enhanced service, cost pressure on physicians, and demands for quality assurance. Although there are advantages and disadvantages to each of the outpatient settings (see Tables 5 and 6), the EASC seems to offer the most value to patients, payers, and physician owners. That value is defined as good outcomes, excellent service, and reasonable cost. Those attributes of the EASC that are most important in guaranteeing this value are physician control, time efficiency, convenience, and adequate reimbursement. The endoscopic ambulatory surgery center seems to be the best environment for delivering endoscopic services. The office AEC can only approach the attractiveness of an EASC when restrictive certificate-of-need laws prevent the development of an EASC; when groups lack a critical number of endoscopists to support an EASC (at least three endoscopists with a potential procedure volume of 1200 to 1800 procedures per year [11]); when excess office capacity and personnel can be used for the office AEC; and, perhaps most importantly, when there is an ability to secure favorable contracts for facility payment from private health plans to the office endoscopy center. The evolution of EASCs over three decades has demonstrated many advantages to patients, physicians, and payers. Although further questions and challenges are inevitable, EASCs can adapt quickly and deliver value. The author believes the future is deservedly bright for such facilities.

Profiting from value-added wireless services

Energized by the prospect of a mobile commerce era, wireless telecommunication providers have spent hundreds of billions of dollars just to buy radio spectrum rights in auctions around the world. Costs for wireless infrastructure, equipment, and marketing will add hundreds of billions more. Wireless providers do not expect payoffs from such a huge investment any time soon but instead are focusing on rapidly gaining market share before the rollout of third-generation (3G) wireless technology. Many wireless providers are struggling to turn their infrastructure services into a profitable business. By tying with differentiated value-added services, a wireless infrastructure provider can increase its market power and thus its profit. The large size, stability, and long-term presence of wireless infrastructure providers should allow them to overcome inherent constraints on their ability to differentiate products. By continually striving to build up relations with certain types of service providers, they can gain reputations as specialists, even if the cooperating service providers repeatedly change. As a result, wireless infrastructure providers can attract a pool of loyal consumers and use this asset to negotiate favorable contracts with service providers.

Are Managed Care Patients Steered to Higher-Risk Hospitals for Cardiac Surgery?

Managed care plans often direct patients to undergo procedures at hospitals with which the HMOs have favorable contracts. These researchers used

Selective Contracts, Foreclosure, and the Chicago School View

Abstract I examine a mechanism by which exclusive supply contracts may inefficiently deter entry into the market. In the model, the incumbent supplier selectively offers contracts only to some buyers and convinces them to consent by guaranteeing them low prices. The contracts strengthen the monopoly position of the incumbent supplier and allow it to extract rents from the remaining buyers that were not offered contracts. Aside from the favorable contract terms, buyers have another reason to consent to the exclusivity scheme: the latter raises the input costs of rival buyers that were not offered contracts. The model has potential applications to the recent Microsoft antitrust case (1994). I define exclusive supply contract as an agreement under which an upstream firm becomes the exclusive supplier of a downstream firm; the downstream firm is prohibited from buying from other suppliers.

The Kigyo Keiretsu Organization and Opportunism in the Japanese Automobile Manufacturing Industry

This paper contends that the distinguishing feature of the subcontracting system for the manufacture and distribution of auto-parts in the Japanese automobile manufacturing industry can be explained by the opportunism hypothesis of transaction cost theory. Opportunism may arise when the parts-supplier uses its information advantage to obtain more favorable contract terms with the manufacturer. It is argued that in response to this kind of ‘informational opportunism’, the automobile manufacturer institutes a special form of vertical arrangement, called the kigyo keiretsu group. The kigyo keiretsu group consist of an association of vertically related parts-makers held together by a high degree of sales and technological interdependence, by partial stock ownership, by interlocking boards of directors and by long-term contract. This study raises the possibility of mitigating opportunism among the kigyo keiretsu group firms throughout the core automaker's shareholdings of its parts-supplier.

Exclusionary Equilibria in Health‐Care Markets

We have demonstrated that when providers of health insurance are perceived to be differentiated by consumers, circumstances may arise under which they find it advantageous to restrict the set of health‐care providers that they approve to their customers. Even if all health‐care providers are equally qualified and efficient, payers may choose to contract with a selected subset of them in order to secure more favorable contract terms. Moreover, in a concentrated health‐care market that consists of two health insurance companies (payers) and two health‐care providers (hospitals), both payers may choose to contract with only one of the hospitals while excluding the other completely from the market. When consumers' valuation of an extended choice of providers is small in comparison with the extent of differentiation that exists between the payers, such an exclusionary outcome is the unique equilibrium of the game.

Outsourcing the preparation of parenteral nutrient solutions.

A hospital pharmacy's experience with using an outsourcing center to prepare parenteral nutrient solutions (PNs) is described. In 1994 the pharmacy at a 340-bed level 1 trauma center selected an outsourcing center located 20 miles away to provide PN-compounding services; the center is licensed as a manufacturer and has an extensive quality control program. The necessary telephone and computer links were established. When a PN order is received, the pharmacist simply dials into the outsourcing computer system and enters the order. At 1400, a pharmacist dials into the system to verify all PN orders entered for that day. After 1500, personnel at the outsourcing center print labels and compound the solutions, which are delivered by courier within a few hours. The net savings during the first year of outsourcing PNs were estimated at about $59,000. The savings were attributable to the elimination of a technician full-time equivalent (FTE), a reduction in pharmacist labor, and favorable contract provisions; money was saved even though the service's PN-preparation fees outweighed the savings from reductions in labor. The hospital's onsite inventory of PN supplies decreased by $5800, and storage space was freed for other uses. Very few problems were associated with the service provided. Outsourcing the preparation of parenteral nutrient solutions reduced personnel, inventory, and expenditures in a hospital pharmacy.

Reduction of operational costs by planned interruptions of aeration in activated sludge plants

A full scale investigation was carried out at the CETREL activated sludge plant to evaluate the technical feasibility of operational cost reduction by planned interruptions of aeration during the daily periods of three hours of high tariff, imposed by the power supply company. It was experimentally established that the daily interruptions did not affect adversely the effluent quality and that sludge activity as well as the settleability remained unaltered. On the other hand the reduction of energy consumption during the high tariff period generated a decrease of operational costs of more than US$ 400.000 per year. Because of the fact that interruptions of aeration in the activated sludge process was shown to be economically feasible, CETREL was in a position of negotiating a more favourable contract with the power supply company, whereby a lower price for power during off peak hours was obtained in exchange for low consumption during the high tariff hours of peak demand.

Reduction of operational costs by planned interruptions of aeration in activated sludge plants

A full scale investigation was carried out at the CETREL activated sludge plant to evaluate the technical feasibility of operational cost reduction by planned interruptions of aeration during the daily periods of three hours of high tariff, imposed by the power supply company. It was experimentally established that the daily interruptions did not affect adversely the effluent quality and that sludge activity as well as the settleability remained unaltered. On the other hand the reduction of energy consumption during the high tariff period generated a decrease of operational costs of more than US$ 400.000 per year . Because of the fact that interruptions of aeration in the activated sludge process was shown to be economically feasible, CETREL was in a position of negotiating a more favourable contract with the power supply company, whereby a lower price for power during off peak hours was obtained in exchange for low consumption during the high tariff hours of peak demand.

Wealth Effects from Acquiring Bankrupt Firms

Acquisitions of bankrupt firms can be beneficial because the bankrupt targets may be more receptive to acquisition offers for the purpose of survival, courts can override any resistance that may occur, information on the target is disclosed within the formal reorganization plan, acquirers can accrue tax benefits, and acquirers may assume favorable debt contracts. However, two disadvantages of acquiring a bankrupt firm are higher costs of completing the conversion and the high degree of uncertainty about the target's future cash flows. Results of our analysis suggest that firms announcing acquisitions of bankrupt targets experience favorable wealth effects. Thus, the market appears to anticipate that the present value of future cash flows derived from the target will exceed the cost of the acquisition. Our analysis also found that acquisitions of bankrupt firms yield more favorable wealth effects than acquisitions of healthy firms. The acquisitions of bankrupt firms were especially well received by the market when the acquirer was the sole bidder and when the target's business was closely related to that of the acquirer.

Housing Rental Contracts and Adverse Selection with an Application to the Rent‐Own Decision

A model of rental housing is developed in which landlords cannot observe the utilization rate of their tenants. As a result of this imperfect information, an adverse selection problem exists where high utilization households have an incentive to conceal their type in order to obtain more favorable contract terms. Consequently, the market equilibrium must satisfy a self‐selection constraint, which imposes certain restrictions on the set of contracts that will be offered by landlords. These restrictions are examined in detail, and their implications for a household's decision to rent or own its housing are derived.

Competitive Procurement of Integrated Library Systems

The California Slate University (CSU) successfully procured integrated library systems for five of its nineteen campuses during the fiscal year ending June 1988. The procurements demonstrated that competitive bidding not only is highly effective in reducing the overall cost of library systems, but also allows the buyer to achieve favorable contract provisions that would be difficult if not impossible to obtain in a noncompetitive environment.

Impacts on Agriculture of Deregulating the Transportation System: Discussion

I concur with the general conclusions of Johnson's paper. Transportation deregulation was long overdue. Regulation was ineffective and, in some instances, counterproductive to agriculture, rural communities, and the regulated carrier. There will be individual losers as adjustments are made to less regulation, but the total result for agriculture will be positive. However, I have several reservations about the overall thrust of rail deregulation. Johnson states two justifications for regulation of the transport industry. One is the need for the cross-subsidization of services that the transport firm could not or would not otherwise supply. The other is the argument that the state must protect the public from the market power of the industry. Two examples that the opponents of deregulation use to show that agriculture and rural communities require transportation regulation are then discussed. These are (a) that market barriers to entry will leave rural communities without adequate truck service, and (b) that insufficient competition exists to protect agriculture from railroad monopoly behavior. With regard to truck service to small communities, he concludes, and I fully concur, that free entry and the removal of specific authority restrictions on commodities, routes, and service points will tend to lower rates, improve service, and enhance capacity utilization. The barriers to entry for trucking came more from the regulatory requirements than from market barriers. The Motor Carrier Act of 1980 removed many of these restrictions. The act will have little impact on agriculture and rural communities, and the impact that it does have will be positive. That is also true for airline and intercity bus deregulation. The airways and highways are publicly owned, and freedom to enter a market can provide competition. Rail is different. The roadbed is privately owned. That provides monopoly power. Will sufficient competition exist to protect agriculture from railroad monopoly behavior? Johnson concludes that although there may be some harm, there is no strong evidence to maintain transportation regulation for agriculture. He cites a number of studies to back his conclusions, but each addresses specific issues and not the total deregulation package. That package went much further than thought possible two years ago. Consequently, rail deregulation may have gone too far. I agree with the rail abandonment studies that conclude that the maximum abandonment case is most efficient considering the economic variables studied. However, I am not convinced that the distribution of the economic returns will be equitable. How much of the savings will stay in the rural areas? What will happen to land values 40 miles or more from a subterminal? Will subterminal ownership become controlled by the limited number of regional or national firms that have the access to the capital required to build trainloading facilities and the market power to negotiate favorable contract rates? Do these studies adequately account for the cost of maintaining our road network as grain is moved longer distances to subterminals and the vehicle mix and routes traveled change? The Staggers Act did not leave the ICC and the states enough discretion on abandonments. There still is no master plan with hard decisions on abandonment versus the rehabilitation of marginal lines. The last branchline in an area frequently will have operating profits after competing branches are abandoned if it is rehabilitated at railroad or public expense, but the ICC cannot force a sensible rationalization of the rail system. Some of the studies center on interrailroad competition holding down rates. But, will we really have effective interrailroad competition in 1990 with only six or eight major rail systems? Mergers as a method of rationalization are encouraged by the Staggers Act, but we Jerry E. Fruin is an assistant professor, Department of Agricultural and Applied Economics, University of Minnesota.

Third Party Beneficiary: A Comparative Analysis

Chapter 4 of the new Israeli Contracts (General Part) Law, 1973, introduces the concept of a contract in favour of a third party, while granting express recognition to the right of a third party beneficiary. Even those, (including the author) who maintain, that the right of a third party beneficiary could and should be derived, even before the commencement of the new Law, from the general principles and premises of the old Israeli law of contract, cannot fail to see in the above-mentioned chapter an important innovation in the Israeli legal system.This paper is a comparative analysis of the institution of third party beneficiary. The analysis will consist of a presentation and critical examination of the central concepts and doctrines involved in the institution under discussion, and it will be combined with a comparative survey of the arrangements adopted in various legal systems. The choice of this approach stems from the particular circumstances of the new legislation.While in most countries, comparative legal research is a luxury, in Israel it is a necessity. The new legislation in private law is inspired to a great extent by Continental codifications. As far as the law of contract is concerned, Israel is now in the process of becoming a “mixed jurisdiction”: departing from the common law tradition and technique, and heading towards an independent body of law, derived from various sources, mainly Continental in both substance and form.

Is There Any Hope for New York City Schools?

In this article a professor of school administra tion who has taught in New York City for 40 years harshly condemns the quality of teaching in NYC public schools, once known for excel lence. Since 1961 the city's teachers have improved their salaries and working conditions under a series of favorable contracts won by the United Federation of Teachers. UFT President Albert Shanker was invited to respond to Mr. Griffith's allegations. Sandra Feldman, identified as a "Special Representa tive" at UFT headquarters, replied that "[The article] is so poor it does itself in and really is not worth a response." The Bulletin editors think otherwise, and invite knowledgeable New York City educators to comment on the accuracy of Mr. Griffith's generalizations.