Contractual Waiver Research Articles

Corporate Governance and the Omnipresent Specter of Political Bias: The Duty to Calculate ROI

Subject important qualifications, corporate decision-makers are duty-bound maximize shareholder value. However, there is reason believe corporate decision-makers are allowing their political biases corrupt their decision-making. This essay posits two related fact patterns that should concern advocates of good corporate governance. The first occurs when decision-makers expressly disavow any duty maximize shareholder value, such as when Apple CEO Tim Cook told shareholders, “When we work on making our devices accessible by the blind, I don’t consider the bloody ROI [return on investment],” or when Ed Stack, the chairman and chief executive of Dick’s Sporting Goods, decided that Dick’s should “take stand” on gun violence by foregoing the sale of assault-style weapons, and said in connection therewith, “I don’t really care what the financial implication is.” This type of situation arguably breaches at least the duties of care and good faith without any change current law. Importantly, breach of the duty of good faith may not be immunized by the seemingly ubiquitous contractual waivers of the duty of care. The second relevant fact pattern occurs when decision-maker does not expressly disavow shareholder wealth maximization, but rather points other arguably political goals as the basis for the decision, and is silent as the impact on shareholder value. For example, when Gillette launched its advertising campaign challenging “toxic masculinity,” it publicly justified the decision not on the basis of an expectation of increasing sales, but rather on the grounds that it wanted spark a lot of passionate dialogue and get people to stop and think about what it means be our best selves. In order address the corrupting influence of political bias the extent it is manifest in this latter type of conduct, change in the law may be required. This Essay argues that ready blueprint for such change already exists in the response of the Delaware judiciary the omnipresent specter of directorial self-interest when adopting anti-takeover defenses. Specifically, cases like Unocal Corp. v. Mesa Petroleum Co. apply enhanced judicial scrutiny in such cases before granting decision-makers the benefit of the deferential business judgment rule. Finally, this Essay addresses criticisms of the proposed approach, including the view that the proposed approach would subject too many business decisions an inefficient risk of enhanced scrutiny, and that the challenged proclamations should be treated as mere puffery or are perhaps even necessary maximize shareholder value.

Product safety, contracts, and liability

AbstractA firm sells a dangerous product to heterogeneous consumers. Higher consumer types suffer accidents more often but may enjoy higher gross benefits. The firm invests resources to reduce the frequency of accidents. When the consumer's net benefit function (gross benefits minus expected harms) is decreasing in consumer type, the firm contractually accepts liability for accident losses and invests efficiently. When the consumer's net benefit function is increasing in consumer type, the firm contractually disclaims liability and underinvests. Legal interventions, including products liability and limits on contractual waivers and disclaimers, are necessary to raise the level of product safety.

Appraisal Waivers

Appraisal is a controversial topic. Policymakers have debated the goals served by the appraisal remedy, and legislatures have repeatedly revised appraisal statutes in an effort to meet those goals while minimizing the cost and potential abuse associated with appraisal litigation. Courts have struggled to determine the most appropriate valuation methodology and the extent to which that methodology should depend on case-specific factors. These difficulties are exacerbated by variation in the procedures by which mergers are negotiated and the potential for conflict-of-interest transactions. Private ordering offers a market-based alternative to continued legislative or judicial efforts to refine the appraisal remedy. Through firm-specific appraisal waivers, issuers can limit or eliminate the scope of appraisal rights, thereby reducing the cost and uncertainty of appraisal ex ante. Private companies are making increasingly use of such appraisal waivers, an effort facilitated by a Delaware decision upholding the validity of an appraisal waiver in a private company shareholder agreement. Public companies have not followed the lead of private companies, however, presumably because of impracticality of using shareholder agreements in public companies and a concern that an appraisal waiver in a charter or bylaw would be invalid. This Article considers both the normative and legal case for appraisal waivers. It argues that the modern role of appraisal rights – disciplining the merger negotiation process and policing potential conflicts of interest – warrants understanding appraisal as a structural component of corporate governance rather than a personal right of individual shareholders. Accordingly, it challenges legal analysis that distinguishes between contractual waivers and those in a corporation’s governing documents. It nonetheless reasons that firm-specific freedom to limit or eliminate appraisal rights through waivers is normatively desirable in that it reduces the pressure on lawmakers to get the appraisal remedy “right,” allows appraisal rights to vary in accordance with firm-specific factors and allows tailored appraisal rights that vary according to transactional features. It concludes that both public and private companies should have the power to adopt appraisal waivers. The Article then considers the legal case for appraisal waivers and determines that their validity under current law is questionable at best based on both the scope of existing appraisal statutes and public policy considerations. In light of its conclusion that the availability of appraisal waivers is normatively desirable, the Argument advocates resolving this uncertainty through legislation. The Article proposes that corporation statutes explicitly authorize corporations to modify or eliminate appraisal rights, but that such waivers should only be permitted in corporate charters. This paper was originally posted with the working title of “Appraisal Waivers.”

Contractual waiver of claim under the 1978 Yugoslav Code of Obligations

The paper analyses validity of contractual waiver under the Yugoslav Code of Obligations. Generally, the effect of a waiver of claim under the Code would be an obligation to refrain from exercising a certain right that may be invoked as defence against the waived claim. Under the Code of Obligations, a waiver of claim is generally valid. There are cases where validity of the waiver is explicitly excluded. Is a waiver invalid only in cases where it is expressly forbidden? If not, what would be the criteria under which, irrespective of the fact that there is no express prohibition, a waiver would nevertheless fail to produce effects? Are there additional criteria if a future claim is waived? This paper deals with these issues, seeking to set the criteria under which a (generally permitted) waiver of existing and future claims shall not be effective in a concrete case under the Code.

Allowing the exclusion of set-aside proceedings: an innovative means of enhancing singapore’s position as an arbitration hub

In some jurisdictions, parties who choose arbitration as a means of resolving their disputes can contractually waive the set-aside mechanism, thereby limiting the extent of judicial review that will be available after the award is issued. In recent years, parties and institutions have also shown an increasing interest in such contractual waivers because it is thought that reducing post-award challenges will increase the efficiency and finality of arbitration. However, the validity of contractual exclusions of set-aside proceedings remains a controversial issue. While some jurisdictions uphold the validity of such clauses, others have held that set-aside proceedings cannot be waived in advance, citing fundamental policy reasons. This paper analyses the reasons for each regime and explores whether laws that allow contractual exclusions of set-aside proceedings would be beneficial in the context of Singapore, particularly in enhancing its position as a choice seat for arbitration.

The Interpretation and Effect of Permissive Forum Selection Clauses Under U.S. Law

A forum selection clause is a form of contractual waiver. By this device, a contract party waives its rights to raise jurisdictional or venue objections if a lawsuit is initiated against it in the chosen court. The use of such a clause in a particular case may therefore raise a set of questions under contract law. Is the waiver valid? Was it procured by fraud, duress, or other unconscionable means? What is its scope? And so on. Unlike most contractual waivers, though, a forum selection clause affects not only the private rights and obligations of the parties, but something of more public concern: the jurisdiction of a court to resolve a dispute. The enforcement of such a clause therefore raises an additional set of questions under procedural law. For instance, if the parties designate a court in a forum that is otherwise unconnected to the dispute, must (or should) that court hear a case initiated there? If one of the parties initiates litigation in a non-designated forum that is connected to the dispute, must (or should) that court decline to hear the case? This report, prepared for the International Academy of Comparative Law in connection with its XXth International Congress, analyzes the approach to these questions in the United States. The bottom line is straightforward: almost always, in consumer as well as commercial contracts, forum selection clauses will be enforced. Navigating the array of substantive, procedural, and conflicts rules whose interplay yields that result, though, is far less straightforward. That is the task of this report. Following a short background, it surveys current state law on their use, in consumer as well as commercial contracts. The report then discusses the interpretation and enforcement of forum selection clauses in both state and federal courts. It analyzes their effect on jurisdiction as well as on doctrines involving venue, such as removal and forum non conveniens. The report also covers choice of law problems, particularly as they arise in the course of litigation in federal courts.

A Study on the Contractual Waiver of Article 52 ICSID Convention

A Study on the Contractual Waiver of Article 52 ICSID Convention

Brief of 44 Law, Economics and Business Professors as Amici Curiae in Support of Respondent in Impression Products, Inc. v. Lexmark International, Inc.

Patent transactions are a key component of technology markets, enabling patent owners and other firms to efficiently commercialize new technologies on the costly and risky path from “lab” to “market.” Mandatory patent exhaustion without the possibility of contractual waiver or modification substantially limits the range of possible transactions by precluding the enforcement via patent infringement actions of downstream restrictions relating to sales of patented products. Although mandatory patent exhaustion can mitigate problems of notice and related transaction costs, its categorical approach substantially reduces the static and dynamic benefits — including to consumers — of customized patent transactions. Instead, we support a presumptive approach to patent exhaustion, which allows contractual opt-out when clear notice is provided of a downstream limitation that is otherwise lawful. Such a rule best promotes the invention and commercialization goals of patent law and also is more consistent with the body of prior Supreme Court opinions. Thus, presumptive exhaustion should apply to domestic sales of patented products. Additionally, we argue that while there is little legal basis for exhaustion in the context of foreign sales, should the Supreme Court adopt an international exhaustion doctrine, it should be presumptive for similar reasons.

Contractual waiver of Article 52 ICSID: a solution to the concerns with annulment?

The ability for parties to contractually waive the right to bring annulment proceedings under the ICSID Convention remains as yet untested, creating uncertainty as to whether parties have this tool at their disposal. Given recent focus on the expansive costs and length of investment arbitration as well as examples of expansive annulment decisions, this article looks at whether parties may agree to contractually waive the right to bring annulment proceedings. Alternately it looks at whether certain grounds of annulment may be waived. The conclusion to this inquiry is that total or expansive waiver would most likely be held to be ineffective. However, the article also concludes that there remains a limited possibility that parties could agree to waive or place interpretative limitation on certain grounds, including arguably the most problematic ground, Article 52(1)(b) ICSID. A potential argument may be that parties may not be able to waive the annulment ground entirely but could control, to a certain extent, how ‘the tribunal manifestly exceeds its power’ is to be interpreted. Despite the potential for this limited exception, the primary finding is that whilst party autonomy should be respected as far as possible, the availability of the remedy of annulment is a mandatory rule that must prevail. The right to bring annulment proceedings should be considered beyond the control of the parties, with the consequences of waiver being systemic not merely inter partes , given the role of annulment in promoting the legitimacy of ICSID arbitration under its multilateral treaty regime.

Contractual Waivers of Investment Arbitration: Wa(i)ve of the Future?

In many ways, investment arbitration is a victim of its own success.2 Over 430 investment disputes have been registered with the International Centre for the Settlement of Investment Disputes (‘ICSID’), with numerous other matters proceeding under the auspices of other arbitral institutions or on an ad hoc basis.3 Proponents of investors’ rights consider these numbers to be encouraging, since they suggest that investment arbitration provides an effective remedy for injuries suffered by individual investors.4 However, actual and potential State respondents view these developments in a very different light.5 Not only have State respondents expressed concern about the financial burden of investment arbitration, they have also complained about the real or perceived expansion of tribunals’ jurisdiction into areas that were once seen as falling exclusively within the sovereign prerogative of the State.6 Although efforts have been made to address some of the systemic concerns about investment arbitration,7 many States remain sceptical about the international investment regime.8 As a result, a number of countries have either withdrawn or threatened to withdraw from various bilateral or multilateral investment treaties.9 Other nations have refused or may refuse to enter into international investment agreements in the first place, based on concerns about investment arbitration.10

Testimony to Constitution Subcommittee of the U.S. Senate Judiciary Committee Regarding the Arbitration Fairness Act of 2007 and the Constitutional Duty of Congress to Restore Citizens' Seventh Amendment Rights

The Framers' election to preserve the common law right to civil jury trial in the Bill of Rights means that businesses may not remove this right from citizens by making its waiver a precondition to delivery of goods, services or employment. This conclusion is compelled by two considerations. First, the decision by the Framers to include this right in the Bill of Rights designates it as the kind of fundamental right waiver of which must be protected from any form of coercion, including the coercion imposed when a business makes waiver of the right a non-negotiable condition to delivery of a good, service or employment. Second, looking to the text of the Constitution, the decision by the Framers to protect the civil jury trial right with Article V's strong supermajority amendment requirements evinces their intent that the scope of the right's applicability not be subject to reduction by a less restrictive amendment mechanism - be it a majoritarian statutory amendment process (something the Framers contemplated) or what amounts to private legislation through standardized contractual waivers, a future development that the Framers, understandably, failed to anticipate. Pursuant to the Supreme Court's unconstitutional conditions doctrine, the state may not seek advance waiver of a citizen's Sixth Amendment criminal jury trial right in favor of bench trials in return for some unrelated benefit such as subsidized public housing or college tuition assistance. The coerciveness of such an offer becomes clear when one realizes that if the benefit offered were sufficiently valuable the citizen would readily waive her criminal jury trial right even if she strongly preferred jury trials over bench trials. Symmetrically, the Seventh Amendment civil jury trial right should enjoy the same protection against coercive removal as that provided the Sixth Amendment criminal jury trial right. Thus, a business should not be permitted to require that a citizen waive his jury trial right as a take-it-or-leave-it precondition to delivery of goods, services or employment. Coercion is coercion whether imposed by the state or a private party. Properly understood, it is protection against this form of coercion that constitutes the core minimum distinction between fundamental Constitutional rights and ordinary property interests. Viewed from a slightly different perspective, the very fact that lawmakers set forth an individual right applicable against other private parties in a constitution instead of a statute signals an intent that such right trump other persons' standard property rights where necessary to preserve citizens' ability to invoke such constitutional right. For example, in PruneYard Shopping Center v. Robins, California's Supreme Court held, and the Supreme Court unanimously affirmed, that California shopping centers may not make waiver of a customer's reasonably exercised state constitutional free speech and petition rights a condition to entry. Thus, the California Supreme Court found that the inclusion of these individual rights in California's constitution signals an intent that such rights trump a shopping center owner's common law rights to exclude people from its property and to control the activities permitted thereon. Following the same logic, the decision by the Framers to preserve in the Bill of Rights rather than in an ordinary statute (or not at all) the common law civil jury trial right signals an intent that such right trump the otherwise operable common law right of a business to make waiver of this or any other right a condition to delivery of goods, services or employment.

Contractual Waiver of Corporate Attorney-Client Privilege

Contractual Waiver of Corporate Attorney-Client Privilege

Arbitration Clauses, Jury-Waiver Clauses and other Contractual Waivers of Constitutional Rights

Consenting to a contract containing an arbitration clause or a jury-waiver clause alienates or waives the Seventh Amendment jury-trial right in federal court. The standards of consent in arbitration law, however, tend to be lower than the standards of consent in the federal caselaw governing jury-waiver clauses. The Federal Arbitration Act (FAA) requires courts to apply contract law's standards of consent to arbitration agreements, while certain commentators argue that courts are instead constitutionally required to apply the higher standards of consent (knowing consent) found in the caselaw governing jury-waiver clauses. This article responds to these commentators and argues that the FAA's contract-law standards of consent are constitutional.

The Mythology of Waivers of Bankruptcy Privileges

1granted by the Bankruptcy Code is surrounded by a mythology. The mythology is expressed in an assumption that bankruptcy privileges are essentially non-waivable. This assumption is then cloaked in the armor ofthe Constitution, statutory language and public policy. Several recent court decisions that have enforced contractual waivers of bankruptcy privileges in certain narrow contexts have challenged this mythology. That the mythology still exists, however, is evident from cases continuing to deny the validity of such waivers and practitioners who whisper in the dark that waivers must be limited to narrow circumstances lest the whole house ofcards fall to the reality that bankruptcy privileges really are not waivable. 2 Much more important rights and privileges may be waived at a whim. We can waive the privilege against self-incrimination, the right to a jury trial, and innumerable other constitutional, statutory and common law rights without hesitation or fanfare. Thus, we may flippantly sacrifice our freedom or, perhaps, our life in a capital offense. However, we may rarely, if ever, waive the privileges provided by the Bankruptcy Code due to this bankruptcy waiver mythology. Why do we have this mythology? How did we come to have it? Is there some historical explanation? How should attempts to waive the privileges of bankruptcy be treated in a world where this mythology is unmasked? All ofthese issues will be explored. Given the law ofwaiver as it exists elsewhere in the law, it is maintained in this Article that the present view of contractual waiver of privileges in bankruptcy is enshrouded in falsities and half-truths that can be remedied by looking at the issue not as a sort of exalted class of bankruptcy issue but as waiver is viewed in other contexts—as a purely contractual issue. This Article will first analyze the present state of the law relating to waiver of bankruptcy privileges. Second, it will search for the sources of the idea that privileges in

Contractual Waivers of Sovereign Immunity: Some Practical Considerations

Contractual Waivers of Sovereign Immunity: Some Practical Considerations