Contract Terms Research Articles

Reporting the successful timing of pre-construction services in the New Zealand construction industry - development of a visualisation tool

The use of Pre-Construction Services (PCS), also known as Early Contractor Involvement (ECI) in construction projects has become common internationally due to the various advantages it offers in complex projects. What remains an open question to researchers and government organisations is defining the optimal time to engage in it. This paper develops a methodology that reports on the successful timing of PCS use in New Zealand. This methodology and findings can assist the industry in determining when to appropriately engage a contractor for PCS in New Zealand. Reporting on the successful timing of PCS can help the industry avoid costly pitfalls when engaging in PCS too early or too late. This approach could be extended to an international audience. The timing of PCS and project complexity are closely related. For this paper data was collected in two rounds. Firstly, an online survey was used to determine weights for complexity factors, then a visualization tool was developed and refined using 29 case study projects derived from semi-structured interviews. The results show that there is a relationship between the timing of PCS, the project complexity, and the scale of a project. Additionally, findings show that PCS is not always related to the procurement method. For example, Design-Bid-Build (DBB) projects can still receive valuable PCS to make them successful through fair risk allocation. PCS can have an impact on the contract terms. Each project was given a complexity ranking based on the information given by the interviewees during semi-structured interviews. While the semi-structured interviews were extensive, the information is only as accurate as the recollection of the participant. This risk was minimised by the prequalification of the participants. The findings of this research will assist clients in determining when the best time is to engage PCS. Independent of the procurement model, and will assist clients in maximising the value that the contractor can bring to construction projects.

Renegotiable debt, liquidity injections and financial instability

This paper develops a debt-run model to study the effects of liquidity injections on debt markets in the presence of a renegotiation option. In the model, creditors decide when to withdraw their funding and equityholders can renegotiate the contract terms of debt. We show that when equityholders have a large bargaining power, liquidity injections into distressed firms can rather cause more aggressive runs from their creditors, hurting the debt value. This outcome occurs because equityholders can strategically utilize the renegotiation option as a bankruptcy threat, pushing down the debt value below the potential liquidation value of the firm. In such a scenario, a deterred default resulting from emergency capital injections could be detrimental to creditors.

Latin America’s Polarization in Comparative Perspective

ABSTRACTPolitical polarization is a systemic-level and multifaceted process that severs cross-cutting ties and shifts perceptions of politics to a zero-sum game. When it turns pernicious, political actors and supporters view opponents as an existential threat and the capacity of democratic institutions to process political conflict breaks down. The article identifies four common fault lines of polarization globally – who belongs, democracy, inequality and social contract. It argues that while Latin American countries experience, to varying degrees, all four of the fault lines, it is the deep-seated, persistent social hierarchies oriented around class, race, and place that stand out relative to other countries. Reaching consensus on reforms that may renew or reformulate agreements on the terms of the social contract, boundaries of community membership, and redressing social inequality is a tall task. Yet the region’s sustained consensus on the democratic rules of the game can provide the mechanisms for addressing this task if new majority coalitions can be formed.

Unfair Contractual Terms under the EU Data Act

Unfair Contractual Terms under the EU Data Act

Evolution of Various Legal Dimensions for Flat-buyers in Bharat

This paper delves into the dynamic landscape of laws regulating the rights and responsibilities of flat buyers in India, tracing the evolution of the legal framework from its inception to the present day. The journey unfolds against the backdrop of India's rapidly growing real estate sector, characterized by its multifaceted challenges and opportunities. The study encompasses an in-depth examination of key legislations, judicial precedents, and policy interventions that have shaped the rights and protections afforded to flat buyers. Beginning with an exploration of early property laws, the paper elucidates the factors that necessitated specialized regulations governing the purchase of flats and apartments. The advent of cooperative housing societies and the Real Estate (Regulation and Development) Act, 2016, marks significant milestones in this evolution, with an emphasis on consumer protection, transparency, and accountability. The analysis extends to the interplay between statutory provisions and evolving judicial interpretations, highlighting landmark cases that have influenced the legal landscape. Furthermore, the paper investigates the impact of technological advancements, such as online property transactions and blockchain, on the legal aspects of flat purchases. It scrutinizes the role of digitization in enhancing transparency, reducing fraud, and expediting dispute resolution mechanisms. The study also considers the challenges and gaps in the existing legal framework, offering insights into potential areas for reform. Issues like delays in project completion, ambiguous contractual terms, and the efficacy of dispute resolution mechanisms are examined through a critical lens. Additionally, the paper sheds light on the role of consumer awareness and education in empowering flat buyers to make informed decisions. In conclusion, the Evolution of Law for Flat Buyers in India is a comprehensive analysis that not only maps the historical development of legal frameworks but also provides a forward-looking perspective on potential reforms and innovations. This research contributes to a deeper understanding of the legal dynamics surrounding flat purchases, offering valuable insights for policymakers, legal practitioners, and stakeholders in the real estate industry.

Wholesale Price Discrimination and Contract Unobservability

This study examines how wholesale price discrimination (WD) by a supplier affects different parties in a supply chain involving a common supplier distributing homogeneous products through two competing retailers with different costs under wholesale price contracts. Especially, we allow for contract unobservability, where the contract terms between the supplier and each retailer are secret to the rival retailer. Intuitively, given the downstream asymmetry, WD should be more advantageous than the uniform wholesale price (UW) scheme for the supplier. This is true under observable contracts, as we show that WD benefits the supplier and less efficient retailer but hurts the more efficient retailer, supply chain, and consumers. Under unobservability, however, we find that the supplier may be better off by committing to UW. The intuition is that contract unobservability induces the supplier to set lower discretionary wholesale prices, which can outweigh the benefits of pricing flexibility. Consequently, a lack of commitment to UW can benefit both retailers, improve supply chain efficiency, and increase consumer surplus. Our findings suggest that policymakers should be cautious about imposing restrictions on WD. We also consider three extensions for robustness and offer new insights.

Model Legislation of the International Swaps and Derivatives Association: Harmonization instead of Unification

Since 1996 the International Swaps and Derivatives Association (ISDA) has been extremely successful in preparing and promoting model acts that have been implemented in more than 80 jurisdictions, including the Russian Federation. This circumstance is unique because ISDA, unlike intergovernmental organizations in the field of harmonization and unification of private law, does not have the status of an international organization, being a non-profit corporation. Nevertheless, its model laws, being in demand by legislators from different countries, put ISDA’s activities in the field of harmonization of private law on a par with such international organizations as Unidroit and UNCITRAL. The paper provides a brief description of the basics of the activities of this association. Special attention is given to the preparation of standard framework agreements and terms of contracts. The evolution of its model legislation is traced in detail, including the model laws of 1996, 2002, 2006 and 2018. It is noted that up to 2018, there was a tendency to expand privileges for derivative transactions, including in terms of their types and degree of protection. However, after the collapse of the leading investment bank Lehman Brothers and the subsequent global financial crisis, regulatory approaches to derivatives privileges changed, which was reflected in the latest ISDA model Act.

The Limits of Individual Regulation of Marital Relations based on a Marriage Contract

The paper examines the qualifying features and elements of a marriage contract under the provisions of the Civil and Family Codes of the Russian Federation, as well as the specifics of legal regulation of relations arising in connection with its conclusion. The author critically investigates limitations of freedom of the marriage contract provided for by the mandatory norms of the Family Code of the Russian Federation and the definition of the marriage contract. The author justifies admissibility of determining the shares in the right to the common property of spouses or specific property belonging to them in the event of death or bankruptcy of one or both spouses. At the same time, special attention is paid to incompatibility of the marriage contract with involuntary creditors and creditors to whom its terms were not disclosed, as well as ex post control of the fairness of the terms of the marriage contract. According to the author, the regulatory potential of a marriage contract should not be limited mainly to the disposal of the spouses’ property belonging to them. The author brings up for discussion the possibility of using a marriage contract not only as an administrative, but also as an obligatory transaction, through which it is possible to regulate all property and personal non-property relations arising between spouses, including spouses with common children, in connection with marriage, in marriage and in the event of its termination. The paper highlights that a marriage contract may contain the terms of a corporate agreement defining the procedure for one of the spouses to exercise corporate rights. The author comes to the conclusion that it is necessary to develop dispositive (discretionary) principles regulating relations arising from a marriage contract and defining it as an agreement to family creation and functioning as a non-subjective entity, which would allow considering a marriage contract as a kind of a simple partnership agreement.

Licensing of a product innovation by an outside innovator to a Stackelberg duopoly

ABSTRACT We examine the optimal strategy of an outside innovator owning a quality-improved product when licensing it to a Stackelberg duopoly. We show that only a single licence is granted, regardless of whether there is quantity or price competition in the marketplace. However, both the licensee and contractual terms in each context differ. Under quantity competition, the licence is granted to the market-leading firm by means of a non-distorting contract, whereas under price competition the licence is granted to the market-following firm by means of a distorting two-part tariff contract with per-unit royalty. From a welfare perspective, exclusive licensing is beneficial in both contexts compared to the pre-licensing scenario, although under price competition, consumers can be harmed if the innovation is small. Finally, licensing leads price competition to yield a less efficient outcome than quantity competition due to greater market collusion. Licensing by means of three-part tariff contracts is also discussed, as well as licensing when potential licensees operate as a mixed duopoly.

Pre-Packaged Insolvency Resolution Process (Why Slow Progress?)

The Indian Government has introduced a significant economic and legislative reform known as the Pre-Packaged Insolvency Resolution Process (PPIRP) to bolster corporate MSMEs, which plays a vital role in the Indian economy. This particular process offers a comprehensive framework for the revival and resolution of MSMEs, yet unfortunately, its significance has not been widely recognized. Consequently, the implementation of this process has faced challenges in its current phase. Micro, small, and medium enterprises (MSME) are governed by the MSMED Act. Sections 15 to 23 of the Act outline a specialized mechanism for resolving disputes and enforcing specific business and contractual terms. The Amendment Ordinance of 2021 to the Insolvency and Bankruptcy Code introduced the novel concept of "Pre-Packaged Insolvency Resolution Process" within the framework of the Insolvency and Bankruptcy Code of 2016. The primary aim of PPIRP is to offer an alternative resolution mechanism for MSMEs, ensuring expeditious, cost-effective, and value-optimizing results for all stakeholders. Nevertheless, the utilization of the PPIRP procedure is hindered by inadequate dissemination and comprehension within the industry in comparison to the Corporate Insolvency Resolution Process (CIRP).

The Unfairness of Personalised Price Terms in Consumer Credit Products

Abstract This article examines whether, and if so to what extent, a lender can engage in the algorithmic personalised pricing of consumer credit products (PP) under the Unfair Contract Terms Directive (UCTD) and the Consumer Credit Directive (CCD). To this end, the author first analyses the economic literature to discuss the mechanics of PP and the economic impacts on different consumer groups. This overview is followed by an examination of the UCTD and the CCD, in the broader context of EU regulatory law, as these Directives apply to the practice and the contractual terms. Subsequently, the author applies the considerations of the European Court of Justice (CJEU) in the jurisprudence regarding price terms in credit and mortgage agreements to personalised price terms. Finally, the author concludes that the Directives indeed limit the extent to which a lender can engage in PP, but that the frameworks in the broader EU regulatory context would be better suited than the Directives to address the negative economic impacts of the practice.

Enforcing payment obligations under construction contracts by insolvency proceedings

PurposeStates have intervened with legislation to improve cashflow within construction project supply chains. The operation of the UK’s Housing Grants, Construction and Regeneration Act 1996 leads to payment obligations stated either as a contract administrator’s certificate (or equivalent) or an adjudicator’s decision. The purpose of the intervention would be defeated unless there are speedy ways of transforming these pieces of paper into real money. The combination of the legislation, contractual provisions and insolvency law has produced a minefield of complexity concerning enforcement of payment obligations stated in these documents. Unfortunately, the knowledge and understanding required to navigate these complexities have been sorely lacking. The purpose of this paper is to plug this gap.Design/methodology/approachLegal research methods and case study approaches, using relevant court decisions as data, were adopted.FindingsThe enforcement method advised by the court is the summary judgment procedure provided under the Civil Procedure Rules. An overdue payment obligation, either under the terms of a construction contract or an adjudicator’s decision, amounts to a debt that can be the subject of insolvency proceedings. Although the insolvency enforcement method has been successfully used on some occasions, using it purely as a debt collection weapon would be inappropriate and likely to be punished by the court.Originality/valueThe paper contributes to knowledge in two ways: (i) it maps out the factual situations in which these payment challenges arise in language accessible to the construction industry’s professions; and (ii) comparative analysis of payment enforcement methods to aid decision-making by parties to construction industry contracts. It is relevant to the other common-law jurisdictions in which similar statutory interventions have been made.

Could it Happen in the EU? An Analysis of Loss Distribution between Shareholders and AT1 Bondholders under EU Law

Abstract In March 2023, the Swiss bank Credit Suisse’s so-called Additional Tier 1 (AT1) bonds were written down to facilitate the bank being taken over by UBS, its national rival. Ensuing discussion and market reactions went well beyond Swiss borders, as the write-down was completed without Credit Suisse’s shareholders first being wiped out, thereby deviating from the principle that shareholders bear losses ahead of all other investors. This article asks whether such an outcome is possible under EU law. A comprehensive analysis demonstrates how this question is governed by the combined operation of contractual clauses and the resolution authority’s statutory powers. Combining applicable EU law with empirical analysis of contractual terms employed by EU banks issuing AT1 bonds and their capital requirements, the article argues that an outcome akin to that of the Credit Suisse write-down is unlikely for EU banks. Building on this analysis, it is shown what reform is needed if EU policymakers consider it desirable to have AT1 bonds absorb losses outside of cases requiring intervention by the resolution authority.

Effect of risk and incentives on contracts: The case of farm operators in Iowa

AbstractLongitudinal data on Iowa landowner–operator contracts are used to examine how the mean, variance, and skewness of expected farmland returns affected contract terms from 2008 to 2019. To control for unobserved operator risk preferences and ability as a fixed effect, the sample includes operators with multiple contracts. Our empirical work shows that farmland with lower variance is more likely to be rented for cash, whereas land with highly variable returns is more likely to be custom contracted. [EconLit Citations: L14, Q15]

Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection

We conduct a survey-based experiment with 2,776 students at a non-profit university to analyze income insurance demand in education financing. We offered students a hypothetical choice: either a federal loan with income-driven repayment or an income-share agreement (ISA), with randomized framingof downside protections. Emphasizing income insurance increased ISA uptake by 43%. We observe that students are responsive to changes in contract terms and possible student loan cancellation, which is evidence of preference adjustment or adverse selection. Our results indicate that framing specific terms can increase demand for higher education insurance to potentially address risk for students with varying outcomes.

Some Reflections on the Regulatory Constraints to Labour Malpractices in Cameroon

The rapid drop in the standard of Fair Labour Practices in the private sector of Cameroon is so disturbing. Generally, the recognition of the basic right of each citizen such as the right to work and the security of employment is of paramount importance to a worker because work brings wages by which workers and their families depend on, works gives dignity and meaning to the life of a worker and make the world economy run accordingly. That is why the Cameroonian labour legislator has made much effort in addressing the situation of workers who have been unlawfully dismissed from work by malicious employers or workers whose basic rights to work and security of employment may be threatened. The aim of this study therefore, is to ascertain the regulatory Constraints to labour malpractices in Cameroon. These Labour malpractices mostly committed by profit conscious employers of Labour in Cameroon are characterized amongst others by; the imposition of standard form contracts on their workers, discrimination in the private sector employment, subjecting workers under unsafe working environment and deplorable conditions of work, wrongful discharge of employment, the practice of divide and conquer style of management, gross violations of workers fundamental human rights, arbitrary variation of substantial terms of employment contracts, the questionable practices of labour inspectors, unreasonable restraint clauses in the private sector employment contracts, non-respect of government-mandated minimum guarantee wage, non-conformity of internal rules and regulations to national standard, wrongful suspension of contract of employment etc. These deviant dispositions of employers of Labour, although contrary to deontology, are so embedded in the Cameroonian Labour market causing private sector workers to remain at the same level from January to December every year of their life. In a bid to attain the overall purpose of this study, this research adopts the qualitative research methodology which involve an in-depth content analysis of both primary and secondary data. Findings, therefore, reveal that despite the regulatory, institutional and policy framework put in place to protect private sector employees against any form of labour malpractices, private sector employees are not adequately protected because of gaps in the labour legislation, conflicting interests, economic impact, low Scholarisation of workers, political impact, ineffective implementation of prevailing regulations, the introduction of powerless staff representatives, laxity on the part of some Labour Inspectors to ensure the respect of labour legislation etc constitutes the basis for the multiplication of gross violation of employment rights in the private sector within the country. This research conclude theoretically that the Cameroon Labour Legislation to an extent, guarantees the protection of private sector employees but practically it effective implementation and enforcement leaves much to be desired. This has necessitated the suggestion of some policy recommendations for the way forward. In this regard, in order to attain an effective regulatory, institutional and policy framework which guarantees the protection of workers against any form of labour malpractices in the private sector, we recommends a review of the 1992 Labour Code to better handle any form of labour malpractices affecting private sector employment in today’s era and the Labour Inspectorate being the central state institution charged with the enforcement of employment rights should not only be found seating at the regional and divisional headquarters, they should equally be established in each sub-division in other to take justice nearer to workers who are mostly employed by employers of unskilled labour in the country.

Legal protection of consumers for transactions in counterfeit goods

This study examines the legal protection against consumers in Indonesia for the transaction of counterfeit goods. It uses normative legal research and everyday life studies to analyze the contemporary situation. The study reveals that legal protection against counterfeit goods is regulated by Law Number 15 of 2001, which criminalizes business actors selling counterfeit goods, and Government Regulation Number 82 of 2012, which emphasizes the need for accurate information about producers, goods supplied, and contract terms. Additionally, Article 8 of Law Number 8 of 1999 prohibits business actors from trading goods or services that do not meet the requirements for labels, information, advertising, or sales promotion.

O2O 플랫폼 품질이 자영업자의 디지털 전환에 미치는 영향

Purpose - With the increase of non-face-to-face activities due to the spread of COVID-19, O2O industry has grown rapidly which reduces contact points between suppliers and consumers. O2O platform is now recognized as an indispensable channel of distribution, but the voice is getting louder that it is necessary to check how it contributes to the performance of suppliers or how its fee system or contract terms affects the expansion of O2O industry as the leading companies tend to monopolize the market. Design/methodology/approach - In this study, the scope was limited to the restaurant industry in which transactions are the most active among the O2O industry and a regression analysis was done on 775 businesses that had used guarantor service from the Seoul Credit Guarantee Foundation. Findings - Analysis on the impact of O2O platform system, information, and service quality on the business performance of the sole proprietors revealed that the system quality represented by ease of use and the information quality determined by level of timely, accurate and reliable information provided to the consumers have a statistically significant effect on the improvement of business performance. In addition, the effect of business performance on the loyalty measured by the likelihood of users continuing to use the service as well as recommending it to others was moderated by the satisfaction with contract terms, not by the fee system. Research implications or Originality - Although the number of O2O platform providers has increased manyfold, the membership rate is no more than 20%, which means that the small business owners are still struggling with digital transformation. In order for the O2O industry, which is now commonplace, to form a healthy ecosystem that satisfies both suppliers and consumers, the standard contract guidelines that are acceptable to both parties must be established and the O2O providers must offer services that help suppliers to improve performance.

Accounting of foreign economic activities: impact on current aspects of currency operations supervision and financial monitoring during the period of martial state in Ukraine

Introduction. Accounting for foreign economic activity was and remains a relevant area of accounting support for business entities, which is associated with an increased risk of errors in connection with changes in regulatory documents on such activities, different conditions for carrying out activities due to the variability of the terms of foreign economic contracts, the need to take into account different exchange rates and the correct submission and presentation of information in financial statements. It is important for business entities to comply with the requirements of legislation, to organize proper internal control/internal audit to prevent errors in reflected transactions in the conditions of foreign economic activity. The purpose of the paper is to highlight the features of accounting for foreign economic activity, taking into account the latest changes and the impact on currency supervision and financial monitoring. Results. Subjects of foreign economic activity must also comply with the rules of currency exchange, import and export licensing, as well as customs procedures. Starting from 2019, currency supervision replaced currency control, a risk-oriented approach was introduced. Correct accounting is affected by the control of settlement deadlines, i.e. the time between the customs declaration and the payment. The experience of regulating foreign economic activity in Ukraine was the mandatory sale of proceeds by exporters under foreign economic contracts, which was canceled in 2019 by the NBU Resolution of February 6, 2019, №. 3. During the martial law, it was not restored. Funds, before entering the current account, may first be credited to a distribution account in the bank, which is in transit, and the operations of crediting to the distribution account and transferring to the current account may take place both during the same day and on different days. Based on the set of criteria for risky operations of foreign economic activity and taking into account internal documents, the bank can make a decision to break up the operation and violate the deadlines even if formal criteria are observed in export-import operations. Conclusion. Under the conditions of extraordinary events, there is a need to establish new currency regulation and control measures. Currency supervision is based on a risk-oriented approach and certain indicators of violations of currency legislation should be taken into account when implementing internal control measures.

EXPRESS: Exploring the Development of Heterogeneous Contracting Capabilities: The Role of Organizational Design

Previous research on learning to contract and contracting capabilities suggests that firms in interorganizational relationships adopt contractual designs that economize on transaction costs, and over time learn to govern their relationships in a more efficient manner by incrementally aligning contractual terms with transaction attributes based on new experiences made in their relationships. We augment the learning to contract literature by highlighting the role of organizational design as a factor that may impact contractual learning and the development of heterogeneous contracting capabilities. Specifically, we suggest that the level of specialization and structural integration across the firm’s technical, commercial, and legal functions may affect the effectiveness of contractual learning and the type of learning likely to occur. We also outline boundary conditions for our model in terms of potential interactions between the contractual environment, organizational design, and contractual learning.