Contract Renegotiation Research Articles

Rigidity in public contracts: Implications for renewal dynamics

We investigate how the rigidity of public contracts influences the frequency of their renewal. Using a dataset of contracts for public–private car parks and employing machine-reading techniques to assess contract rigidity, we find that heightened contract rigidity, particularly in litigation clauses, significantly raises the probability of contract renewal. Our findings indicate that procedural sunk costs and the competitive advantage conferred to incumbents by contract rigidity are key factors contributing to more frequent renewals. This study enhances our comprehension of public contract renewals by emphasizing the significance of political contestability and rigidity, providing valuable insights into optimal strategies for contract renegotiation.

Notary Liability on Contract Renegotiation in Business Contracts

Notary Liability on Contract Renegotiation in Business Contracts

The cost of appropriation and firm boundaries

This study introduces an appropriation cost (i.e., cost of requesting rent-seeking-oriented contract renegotiation) in the property-rights theory (PRT) model. We show that significant appropriation-cost economization within a firm leads to the optimality of non-integrated structures, including joint ownership.

A distinctive global pivotal state? The intra-hierarchical messaging of the ROK Indo-Pacific strategy

ABSTRACT The Republic of Korea’s (ROK) Indo-Pacific strategy is widely interpreted as mimicking the language, tone, and agendas of the US Indo-Pacific strategy. Drawing upon existing theoretical work on hierarchy and international relations, this paper challenges simplistic views of the ROK strategy as a pro-US document by presenting a new model of intra-hierarchical messaging to explain how demonstrations of solidarity with a hegemonic order (compliance narratives) can also contain attempts to reassign responsibilities and privileges within this order (distinction narratives). Applying this framework to the ROK strategy reveals how a strong compliance narrative supporting the US hegemonic system exists alongside a distinction narrative articulating a more profitable role for the ROK that deviates from US expectations. Although this strategy has partly elevated Korean status in the US world order, tensions between these narratives may lead to potential negative outcomes for the ROK, such as empty solidarity or reined in leadership. Nevertheless, the article concludes that it may be in US interests to continue this renegotiation of the hegemonic contract.

Coping with unforeseen circumstances: the COVID-19 crisis and bus contract renegotiation in Sweden

In principle, competitively tendered contracts in Swedish public bus transport are not supposed to be renegotiated during the contract period. In practice, it happens quite frequently. The need for renegotiations became evident during the COVID-19 crisis. This external shock to the system was unusually strong. Demand for bus services dropped abruptly, affecting revenues of procuring authorities and, depending on contract type, also bus operators. To make the situation even worse, costs typically remained constant, as frequent services were supposed to be upheld to avoid the spreading of the virus in crowded buses. Contract renegotiations during the COVID-19 crisis were clearly caused by unexpected exogenous events. Contracts with passenger incentives, linking a substantial part of compensation to the number of passengers, have been more likely to be renegotiated than gross-cost contracts, which were easier to adjust to the drop in demand. Typically, renegotiations were triggered by operators. While being a pragmatically rational response to an extreme situation, the renegotiations and their outcome may not in all cases have been compliant with the legal framework for public procurements, even when taking into account the exemptions made possible by the framework. In cases where passenger incentive contracts have been transformed into gross-cost contracts it could be argued that the nature of the contract has been changed. A new tender should then probably have been performed instead, although this has not been tried in court. The COVID-19 crisis could have long-term impact on contracts and procurements in the industry, affecting how effective competition will be in future tenders. For now, gross-cost contracts seem to be the norm, and it is possible that passenger-incentive contracts will become less common overall. One way to handle unexpected events with profound impact could be to include so-called threat-points that trigger renegotiation of a contract.

Penalty and threshold optimisation of the retailer - vendor return contracts for contract re-negotiation in retail reverse supply chains

Penalty and threshold optimisation of the retailer - vendor return contracts for contract re-negotiation in retail reverse supply chains

Penalty and Threshold Optimization of the Retailer - Vendor Return Contracts for Contract Re-Negotiation in Retail Reverse Supply Chains

Penalty and Threshold Optimization of the Retailer - Vendor Return Contracts for Contract Re-Negotiation in Retail Reverse Supply Chains

Navigating contract renegotiations with sustainability at the helm: Societal benefits and transaction costs

Public procurement and cross-sector collaborations in national economies offer the opportunity for advances in sustainability practices, including through sustainability-related renegotiations during the execution of public contracts. Using rich, granular data from contract modification notices made publicly available by the European Union (EU) tenders electronic daily (TED), we investigate whether sustainability-related renegotiations, apart from generating positive environmental externalities, also limit ex-post transaction costs associated with contract renegotiations. Transaction costs are assessed in our study by the sentiment of renegotiations (negative or conflictual) and potential red flags associated with overly costly adjustments. Our findings suggest that regardless of whether contracts were initially focused on sustainable issues or not, sustainability-related renegotiations could have the dual benefit of a priori reducing environmental externalities while further limiting ex-post transaction costs associated with contract execution. More generally, contract modifications (renegotiations) may be under-utilised in public procurement contracts given their possible ‘double dividends’.

Aggressive bidding and the renegotiation of concession contracts: Empirical evidence from Peru*

This paper confirms a positive relationship between the aggressiveness of bids and the probability of renegotiating concession contracts. We use a database of 113 concessions awarded in Peru, finding that a 1% increase in bidding aggressiveness increases the probability of contract renegotiation by 2.4%–3%. This impact is higher for the transportation sector. Our results are robust to several econometric specifications. These results confirm the hypothesis that bidders will submit aggressive bids to renegotiate contract terms once the government and concessionaire are tied, and competition is no longer possible.

Accounting conservatism and managerial information acquisition

We study the interaction between optimal financial reporting rules and managers' incentives to gather additional information about firm performance. Accounting-based covenants transfer control rights to lenders, allowing them to take corrective actions. After the accounting report is released, the manager can exert effort to uncover whether the report is a false alarm or unduly optimistic. The manager's incentive to gather information stems from optimal incentive contracts and private benefits of control that she loses when the project is liquidated. We derive conditions under which managerial information acquisition renders conservative reporting optimal for shareholders and show that these conditions relax when the manager derives greater private benefits from the project or the cost of information acquisition declines. Our model provides novel explanations for existing empirical findings and offers new predictions with respect to covenant waivers, debt contract renegotiations, and the frequency of corrective actions.

Unfair trading practices and countervailing power

This paper investigates whether countervailing power of collective initiatives (cooperatives, producer organizations, associations) can mitigate unfair trading practices in agricultural markets. The study hypothesis is that collective initiatives exerting countervailing power can attenuate the imbalance in the distribution of bargaining power that is considered one of the main causes of unfair trading practices. Our findings suggest that in a multidimensional bargaining setting where all contract terms are negotiated at once, there is no theoretical expectation that exerting countervailing power necessarily results in a mitigation of unfair trading practices. To investigate the topic empirically, we used a data set measuring fairness perception of a sample of Italian kiwifruit producers. The data support the hypothesis that membership in collective initiatives increases the probability that a farmer perceives a transaction as fair. However, countervailing power does not counter all unfair practices in the same way. While patrons of collective initiatives perceive benefits in price and quality determination practices, no such effect was found for contract renegotiation. The analysis compares two policy approaches: supporting countervailing power and banning specific practices (such as EU Directive 633/2019). We conclude that countervailing power is less effective in targeting specific unfair practices, but it is less likely to determine efficiency loss because it does not impose constraints on contractual negotiations.

Of duty and diaspora: (Re)negotiating the intergenerational contract in South Asian Muslim families

In recent years, there has been exponential growth in the South Asian Muslim population in the United States. This demographic trend, along with a rapidly aging North American population, implies that very soon, a significant proportion of U.S. adults 65 years and older will identify as South Asian Muslim. Moreover, more than one-half of Muslims (57%) live in a multi-person/multi-generation household where all members identify as Muslim. Despite this evidence, limited research exists on the dynamics of multigenerational living in aging South Asian Muslim households, particularly around intergenerational support exchanges and the nature and strength of affectual bonds between generations. Additionally, research suggests that espoused within internalized cultural norms around filial obligation and duty, kinwork in South Asian families remains highly gendered. Less is known, however, about the gendered nature of kinwork in immigrant South Asian Muslim families. Based on 30 in-depth narrative interviews with three generations of South Asian Muslim women living in the U.S., this paper addresses these gaps, specifically focusing on intersections of faith, culture, gender, age, immigrant status, and age at migration. The findings from this study point to a renegotiation of the intergenerational contract, wherein care and support for a parent or grandparent were understood and enacted within the framework of an overarching Muslim identity, while simultaneously, for their older relatives, it was reinterpreted within shifting local and global realities such as the increasing participation of the middle generation, the daughters and daughters-in-law, in the paid workforce. In addition to providing insights into ethnic and religious-oriented experiences of aging and care, these findings may help inform policymakers and stakeholders (e.g., community service providers and faith leaders such as imams of mosques, researchers, and family members) in culturally congruent ways to support the health and well-being of aging South Asian Muslim families.

Alliance Dynamics for Entrepreneurial Firms

Small firms are thought to encounter various difficulties implementing strategic alliances. Due to these problems, they may be less able to reap the benefits of alliance adaptation, and the changes that occur in alliances over time often will not coincide with the small firm's interests. The evidence we present on contractual renegotiations in alliances suggests that small firms are no more or less likely to experience contractual changes in general. However, small firms tend to bear inefficiencies of two kinds in their collaborations. They are less likely to adapt alliances in the presence of governance misalignments. Furthermore, they are prone to make greater transaction-specific investments without commensurate contractual safeguards, which can lead to ex post hold-up in the form of contractual renegotiations.

Imaging, Desiring, Remembering Home: Home as a Locus of Meaning in the Works of Mary Kelly

This article examines selected works by American visual artist Mary Kelly (b. 1941) through the category of the home. Home is theorized both as a physical structure, which shapes female subjects’ identity and their life practice, and a profoundly conflicted symbolic site of struggle that allows for a renegotiation of the social contract. The article reads Kelly’s early works, Antepartum (1973) and Post-Partum Document (1973-79), understanding home as a mytho-physical dwelling place, the mother’s body, which the artist presents as ideologically interpellated and, at the same time, problematized by her own experience. Kelly’s later work, Interim (1984-89), is discussed as juxtaposing received ideas concerning femininity with the voices of women who fail to fulfill them, and thus are rendered symbolically homeless. Symbolic homelessness seems also pivotal to the 1992 Gloria Patri, in which the artist exposes the cultural alienation of women who enter the military. The 1991 Mea Culpa and the 2001 Ballad of Kastriot Rexhepi also take up the subject of cultural homelessness. Here, the artist addresses traumatic dimensions of military conflicts, which she understands as tightly connected to the victims’ tattered or lost ethnic and national identity. In the 2005-07 Love Songs, Kelly changes her focus to envision home as a physical and semantic vessel for the 1970s women?s movement voices, which, in her installation, are united by a transparent home-like structure. Finally, in the 2010-12 Habitus, co-authored by Ray Barrie, the artist returns to the subject of home, which, in this case, is profoundly disturbed by the lingering context of the Cold War. This article discusses Kelly’s diverse uses of the home along the lines of art theory, psychology of the object, and feminist criticism (Nancy K. Miller, Luce Irigaray and Julia Kristeva) in order to present their social and political implications. It understands home as evoking (utopian?) associations of eternal return or a desired horizon, towards which the spectators are encouraged to travel both through their memory-work and life-activism.

ПІДХОДИ ДО ВИЗНАЧЕННЯ ПРИВАТНО-ДЕРЖАВНОГО ПАРТНЕРСТВА У ПУБЛІЧНОМУ УПРАВЛІННІ

In the article the main approaches to defining the concept of "public-private partnership" are analyzed. The most common implementation schemes of public-private partnership are considered. The difference between the concepts of public-private partnership, public procurement, privatization and concession is outlined. The role of the partnership between the state and business in ensuring the balanced development of the state is substantiated. Attention is focused on the most important issues of interaction between state and private operators, which require legislative regulation to ensure the success and efficiency of partnership interaction. The characteristic features of public-private partnership relations are substantiated. It has been established that public-private partnership involves the provision by the private sector of infrastructure assets and services that were traditionally provided by the government. The infusion of private capital and governance can ease fiscal constraints on infrastructure investment and improve efficiency. Reflecting these advantages, PPPs are gaining popularity around the world, with a number of countries having well-established programs while many others have less developed programs or interest in them. However, it cannot be taken for granted that PPP is more efficient than public investment or public provision of services. It is argued that adequate risk transfer from government to the private sector is a key requirement if PPPs are to provide high-quality and cost-effective services to consumers and government. But this is only one of the prerequisites for success. The quality of services should be contractual so that payments to service providers can be linked to their performance, the need for costly renegotiation of contracts is minimized, and that there is either competition or incentive regulation, which is a necessary condition for improving efficiency. An appropriate institutional framework characterized by political commitment, effective governance and clear supporting legislation is also needed.

A Meta-Synthesis of Contractual Renegotiations of Public-Private Partnerships and Concessions

A Meta-Synthesis of Contractual Renegotiations of Public-Private Partnerships and Concessions

Implementation of Hardship Principles on Financing Agreements Islamic Bank Due to Corona Virus Disease 2019

Introduction to The Problem: This research analyzes covid-19, designated a disaster by the Indonesian government, especially its correlation to finance agreements in Islamic banks. The determination of disaster raises the question of whether covid-19 is a force majeure or hardship. According to Financial Service Authority (OJK), non-performing financing in Islamic banks is increased. Implementation of Force majeure principle to finance agreement in Islamic bank as a government policy is not right decision. Purpose/Objective Study: this legal research aims to analyze the effects of the coronavirus disease 2019 on finance agreements in Islamic banks and how is the implementation due covid-19 to renegotiation of finance agreement force majeure principle or hardship principle. Design/Methodology/Approach: This legal research is a normative legal study with two approaches: statute and conceptual approaches. Primary sources from Finance agreements in Islamic banks and statutes/rules. Secondary sources are books, journals, research, and dictionary. The legal analysis is carried out by classification of primary and secondary sources using the statute and conceptual approaches. Findings : The spread of the covid-19 virus has had many impacts on the ability of Islamic bank debtors to carry out their achievements due to the difficult conditions experienced due to restrictions by the government. The determination of the status of covid-19 as a disaster has implications for the occurrence of forced circumstances, so it is necessary to make adjustments to the situation based on the principle of hardship for financing agreements with Islamic banks. The occurrence of hardship for sharia bank customers provides an opportunity for customers to apply for contract renegotiation in the context of adjusting problematic contracts in the form of rescheduling, reconditioning, or restructuring Paper Type: Research Article

Bargaining power and renegotiation of small private debt contracts

Bargaining power and renegotiation of small private debt contracts

THE USE OF PERSONAL RESPONSE SYSTEMS TO RENEGOTIATE THE DIDACTICAL CONTRACT IN TERTIARY MATHEMATICS EDUCATION

Challenges experienced by first-year students transitioning from secondary to tertiary mathematics education are examined through the lens of the didactical contract. The didactical contract describes the expectations of both lecturer and students about their mutual obligations towards teaching and learning. First-year students’ beliefs about the nature of mathematics and mathematics teaching/learning need to be challenged to renegotiate the didactical contract at tertiary level. The study focuses on how to elicit and confront transitioning students’ beliefs in order to support their learning and influence a shift in the didactical contract. A Likert scale questionnaire was deployed at the beginning of students’ first year to gauge their beliefs about mathematics and mathematics teaching/learning and redeployed near the end of the first semester (or term) to observe possible changes in their beliefs and hence the didactical contract. The intervention consisted of personal response system (PRS) sessions regularly incorporated into the traditional transmission mode lecture to flip the classroom and create a student-centred learning environment, aimed at influencing students’ beliefs in order to make them aware of their own learning and their responsibility for learning. Questionnaire data were quantified and compared for the before and after surveys. There is evidence of a shift towards students taking ownership of their learning and a renegotiation of the didactical contract. Qualitative data generated by focus group interviews confirm the role of the PRS sessions in influencing student beliefs and the didactical contract.

Addressing Adverse Selection in Public-Private Partnership (PPP) Procurement: An Agent-Based Approach

In risky public-private partnership (PPP) projects, governments and public institutions tend to offer private investors certain guarantees for their participation. However, when public sector capacity and institutions are weak, these guarantees can generate moral hazard in the bidding process and lead to contractual renegotiations, resulting in a loss for taxpayers. Drawing on a sophisticated, agent-based model that recreates the complex dynamics of the PPP procurement process, this paper demonstrates public sector competency is crucial for limiting moral hazard when guarantees are offered in PPP projects.