Contractual Alternatives Research Articles

Personal Status in Lebanon Versus Optional Civil Marriage

Abstract Marriage in Lebanon is a matter of religious law, and all attempts at introducing a civil marriage law have failed so far. This Article discusses the absence of a civil marriage law: was the Lebanese system supposed to include a civil marriage law? Is there a real need for it? Why have all legislative interventions failed? What are the alternatives? To answer these questions, we will focus mainly on the 1998 project of a civil Personal status law presented by President Hrawi, being the most complete and advanced attempt so far. The reactions for or against it are most representative of the Lebanese situation. We reach the conclusion that past legislative attempts always failed ‘upstream’, never reaching the Parliament, while contractual alternatives are not a viable option. The introduction of a civil marriage law, despite its necessity, cannot be achieved by mere legal means, but needs a governance-level answer.

Miscounselling in the German Insurance Market—Utility-Orientated Implications for the Meaning of Miscounselling

Miscounselling results from the fact that consumers have difficulty matching their needs and preferences with the characteristics of the products and have to rely upon an intermediary. The ideal contract can be found by applying the theory of the consumer by Lancaster and, thus, using different amounts of the contract characteristics. Using a spatial representation of the contractual alternatives yields a model framework. The main question is how to differentiate between advice that improves the consumers’ situation and those that are wrong in order to define an accuracy level for the liability rule imposed by the Insurance Contract Act. After identifying the relevant variables via case studies, it is possible to state a general definition of miscounselling: miscounselling can be defined as the provision of any additional information that does not help to reduce the utility loss referring to an initial situation. Considering this definition, one can think about rewording the current liability rule.

Investment timing and vertical relationships

We show that the standard analysis of vertical relationships transposes directly to investment dynamics. Thus, when a firm undertaking a project requires an outside supplier (e.g., an equipment manufacturer) to provide it with a discrete input to serve a growing but uncertain demand, and if the supplier has market power, investment occurs too late from an industry standpoint. The distortion in firm decisions is characterized by a Lerner-type index. Despite the underlying investment option, greater volatility can result in a lower value for both firms. We examine several contractual alternatives to induce efficient timing, a novel vertical restraint being for the upstream to sell a call option on the input. We also extend the model to allow for downstream duopoly. When downstream firms are engaged in a preemption race, the upstream firm sells the input to the first investor at a discount such that the race to preempt exactly offsets the vertical distortion, and this leader invests at the optimal time. These results are illustrated with a case study drawn from the pharmaceutical industry.

On the Timing of Investment in Vertical Relationships

We show that the standard analysis of vertical relationships transposes directly to investment dynamics. Thus, when a firm undertaking a project requires an outside supplier (e.g., an equipment manufacturer) to provide it with a discrete input to serve a growing but uncertain demand, and if the supplier has market power, investment occurs too late from an industry standpoint. The distortion in firm decisions is characterized by a Lerner-type index. Despite the underlying investment option, greater volatility can result in a lower value for both firms. We examine several contractual alternatives to induce efficient timing, a novel vertical restraint being for the upstream to sell a call option on the input. We also extend the model to allow for downstream duopoly. When downstream firms are engaged in a preemption race, the upstream firm sells the input to the first investor at a discount such that the race to preempt exactly offsets the vertical distortion, and this leader invests at the optimal time. These results are illustrated with a case study drawn from the pharmaceutical industry.

Supportability scenario-based contract alternatives for operating life of a mechanical system

Supportability for a user is the ability of the manufacturer to execute all the support activities that are required for the upkeep of the system, in the most effective, efficient and timely manner throughout the operating life of the product, whenever and wherever needed. In this work, the various issues of supportability of mechanical systems have been studied. The case study is conducted on a compressor manufacturer (Burckhardt), which provides support to their end products that are installed at compressed natural gas stations in National Capital Region (NCR). Both the Burckhardt and its customer have aggressive plans of expanding their operations to new locations in future. As a first step, it is necessary to have a mechanism to generate and evaluate various contract alternatives (CAs) with an objective of minimising the costs incurred to various players in the contract and at the same time, ensuring the minimum service level performance of the system. The methodology presented in this paper will be helpful to Burckhardt and/or any original equipment manufacturer in general, for selecting supportability-based CAs. This study will also be helpful to researchers, engineers, maintenance professionals and other persons concerned, to understand the issues involved in supportability-based CAs.

Nigeria's National Content Bill: The Hype, the Hope and the Reality

AbstractNigeria's recent efforts to pass local content legislation with stringent targets and stiff penalties have drawn widespread attention, spurred ongoing debate and prompted numerous international workshops and seminars. Lack of local content has been blamed for high unemployment and lack of capacity, and even been linked to militancy in the Niger Delta region. After much debate and delay, the bill has become law. This article reviews the bill's history and tracks the hype surrounding Nigeria's moves towards a legislative mandate. It discusses the provisions of the bill, observing that it is poorly drafted, vague and therefore difficult to comply with. The bill could also violate international agreements, such as bilateral investment treaties and GATT, and is unnecessary in the face of contractual alternatives that could be successfully utilized to enhance local content. Contract models contain ample provisions for enabling local content and have been successfully employed by other resource-rich nations.

Campos de recría en el Uruguay: gestión de los recursos y formas contractuales

Los Campos de Recría atienden el crecimiento y desarrollo de terneras hasta la categoría de vaquillonas en gestación. Este servicio al productor lechero se realiza en establecimientos administrados por organizaciones de productores, mayoritariamente en tierras propiedad del Estado. El objetivo del trabajo fue determinar cómo son la organización y el uso de los recursos y cómo se establecen los acuerdos con los productores. Mediante la metodología de encuesta se generó información de 13 CR. Fueron usuarios 737 productores lecheros entre 2007-2008, que equivale al 22% de productores remitentes a planta y al 16% del total de productores lecheros. Se relevó una dotación de 18.057 animales en 19.891 ha, lo que representa el 2,3% del área lechera nacional. El 85% de los CR realiza contrato de pastoreo con los productores; solo dos CR utilizan el contrato por capitalización, que remunera por peso ganado del animal. El mecanismo de cobro más frecuente es la retención mensual en la industria. El 75% de los productores utiliza contrato verbal con el CR. En 6 CR la ganancia de peso diaria de los animales es menor a 420 g/día y de éstos, 4 CR tienen estadías por encima de los 24 meses. Los CR con más del 75% de campo natural presentan las mayores estadías y menores ganancias diarias. Se albergan animales provenientes de tambos de diferente tamaño y desarrollo tecnológico, por lo que no se observa especialización por estrato. Aquellos CR que obtienen ganancias menores a 420 g/día, estadías superiores a 30 meses y menos de 80% de preñez, tienen dificultades para atraer usuarios. El ingreso neto lechero nacional podría incrementarse en US$ 96 millones si se adoptara esta herramienta por productores lecheros que actualmente crían su propio ganado.

An economic analysis of contracts signed between tour operators and travel agents

The tour operating process is based on many phases, one of which is the distribution of tourist products through the telephone, websites (direct sale) and through the traditional channel of exploiting travel agents’ skills and experience (indirect sale). This paper provides an economic analysis of contracts characterizing the relationship between tour operators and travel agents by taking into account risk-sharing, incentives and flexibility of contractual alternatives. The first part focuses attention on existing agreements regulating commercial and marketing aspects of the economic relationship with tour operators of both independent agents and agents belonging to a network, something whose importance is increasing over time. After the analysis of standard contracts, the paper describes controversial factors limiting the use of a potential compensation system based on a relative performance evaluation that, given the characteristics of the tourist market, could give firms a number of advantages.

Long‐Term Ground Leases, the Redevelopment Option and Contract Incentives

Ground leased property trades at a discount relative to the fee interest. We explore contractual alternatives that would be Pareto preferred by owners of the leased fee estate and the leasehold interest. The sharing of the value of the residual claim between the owner of the leased fee and the leasehold and a lease extension clause triggered by redevelopment can enhance the value of the asset to both parties. The results suggest that employing such contractual terms in ground leases in the United States would lead to outcomes more consistent with the fee simple case. Escalation clauses also have a potential impact on the timing and intensity of redevelopment.

Introduction: The law and economics of real estate

was to assemble a group of papers that applied the insights and methods of law and economics to issues related to real estate. I believe that the seven articles included herein accomplish that objective admirably. What is most impressive is the wide range of topics covered, including issues in property law, tort law, contract law, and methodology. I have organized the papers according to these subject areas. The first two papers address issues in property law. Hughes and Turnbull examine the use of land-use covenants as private, contractual alternatives to zoning as a means of promoting efficiency in the land market (the analysis thus overlaps with contract law). They first develop a theoretical model that highlights the economic function of covenants--namely, to allow landowners to make credible commitments regarding land uses in the presence of spatial externalities. They then go on to examine the actual spatial variation of covenants in a particular urban area in light of the theory. Trefzger and Colwell examine the implications of paying compensation for government "takings" on the incentive of landowners to invest in land. It has been previously shown, most notably by Blume, Rubinfeld, and Shapiro (1984), that paying full compensation creates a moral hazard problem that leads to overinvestment. The primary contribution of the Trefzger and Colwell paper is to develop a model that unifies the literature that has arisen around this issue. The next two papers deal with issues intort law. Boyd, Harrington, and Macauley examine the effects of liability for environmental contamination on the operation of the land market. They show that uncertainty over potential liability of landowners per se does not necessarily impede efficient transfer and development decisions; instead, inefficiencies arise from information asymmetries between buyers and sellers and from costs of detecting hazards. The paper by Mieeli, Pancak, and Sirmans examines laws that assign liability for injuries caused by lead paint. In general, they show that holding landlords and sellers of housing strictly liable for damages suffered by tenants and buyers, respectively, is inefficient because it will result in overinvestment in removal of lead paint, and underinvestment in precaution against contamination. They do argue, however, that landlords and sellers should have a duty, backed by threat of liability, to disclose known hazards. The paper by Jaffe and Sharp examines statutorily imposed moratoria on mortgage foreclosures against the background of vairous theories of contract law, including the economic theory. Since foreclosure moratoria suspend the enforcement of one party's contractual obligations, they can be defended on efficiency grounds only if there ever exist situations in which nonenforcement of contracts is efficient. The authors examine explanations of this sort. Their conclusions are largely speculative and point to the need for further research.

Can the “New Forms of Investment” Substitute for the “Old Forms?” A Transaction Costs Perspective

This paper uses transaction costs theory is used to explain the features of the new contractual alternatives to foreign direct investment (the “new forms”), to assess their efficiency, and to forecast their future development.

Vertical Integration and Contractual Alternatives with a Perfectly Competitive Output Market: A Generalization

Vertical Integration and Contractual Alternatives with a Perfectly Competitive Output Market: A Generalization

Transactions cost economics and the multinational enterprise An Assessment

This paper applies transactions cost principles to the multinational enterprise in order to ascertain its distinctive properties as a mode of economic organization. The analysis helps identify just when and where contractual alternatives to the multinational firm are likely to be viable. This turns out to depend upon the nature of the technology, the regime of appropriability within which the firm operates, and the characteristics of the markets in question. Transactions cost analysis is also extended to the multinational enterprise-host country relationship. Implications for management and public policy are derived.

Neo-No-Fault Remedies for Medical Injuries: Coordinated Statutory and Contractual Alternatives

Suits to recover for personal injuries resulting from medical malpractice can be among the most unpredictable and most complex to litigate. Because provider fault is frequently difficult to measure-even (and sometimes especially) with the assistance of the parties' alleged (and opposing) expertsa lay jury is apt to be influenced more by its subjective and emotional reaction to the injured patient's plight than by the appropriateness of the defendant's conduct. Thus, lengthy and costly litigation can yield unpredictable results, and this unpredictability raises the costs of claims evaluation and often makes settlements harder to reach. Perceptions of the system as a game of chance rather than as a sound mechanism for catching negligent behavior may undercut the system's value in raising professional standards and deterring injuries.' If providers of health care believe that the legal system lacks the capacity to be reasonable and may penalize even the appearance of negligence, they may err in the direction of practicing inefficient defensive medicine by spending large amounts to make it appear that nothing was spared in the plaintiff's case. The system's haphazardness also diminishes its value as a protection for injured patients. One seriously injured party may recover nothing at all or far less than fair compensation, while another receives an award far in excess of his actual loss. Inconsistency is enhanced by allowing juries to award damages for such noneconomic losses as pain and suffering and loss of consortium. Because monetary valuation of such nonmonetary losses is inherently irrational, plaintiffs are encouraged to play upon the jury's sympathy, further distracting attention from the issue of provider fault. The cost of the tort system is also increased, without increasing its value as a

Investment banking and the capital acquisition process

This paper reviews the theory and evidence on the process by which corporations raise debt and equity capital and the associated effects on security prices. Findings from related transactions are used to test hypotheses about the stock price patterns accompanying announcements of security offerings. Various contractual alternatives employed in security issues are examined; for example, rights or underwritten offers, negotiated or competitive bid, best efforts or firm commitment contracts, and shelf or traditional registration. Finally, incentives for underpricing new issues are analyzed.

Law and Economics of Vertical Integration and Control

Law and Economics of Vertical Integration and Control focuses on the processes, methodologies, and approaches involved in the law and economics of vertical integration and control. The publication first elaborates on transaction costs, fixed proportions and contractual alternatives, and variable proportions and contractual alternatives. Discussions focus on sales revenue royalties, ownership integration, output royalties, important product-specific services, successive monopoly, advantages and limitations of internal transfers, and transaction cost determinants. The text then examines vertical integration under uncertainty and vertical integration without contractual alternatives. The book ponders on legal treatment of ownership integration and per se illegal contractual controls. Topics include tying arrangements, public policy assessment, resale price maintenance, vertical integration and the Sherman Act, market foreclosure doctrine, and the 1982 Merger Guidelines. The text also takes a look at contractual controls that are not illegal per se, alternative legal rules, and antitrust policy. The publication is a dependable reference for researchers interested in the law and economics of vertical integration and control.