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We study a principal-agent problem where the agent receives a stochastic outside opportunity (offer) each period, and he cannot commit to the ongoing contractual relationship. Termination, which is costly, allows the principal to go back to an external market to hire a new agent. The principal responds strategically to the agent’s outside offers, choosing optimally between retaining the agent, which must be self-enforced, and terminating him, which then ends the current contract. The model generates both voluntary and involuntary terminations, and dynamics and stationarity outcomes that are of interest especially for understanding employment relationships with on-the-job search.

The American copyright act from 1976 has drawn much attention in the literature, however it has received little consideration by economists. We contribute to this literature by taking up the assumption that publishers may internalize the harm from termination decisions and illuminate the consequences for the contractual relationship between authors and publishers. We provide a bargaining model, the results of which offer new insights and provide a benchmark for future research. We identify differences in contract structures between terminating and non-terminating authors and introduce some key principles for contractual designs. A risk analysis reveals that, contrary to the view in the literature, a termination option does not necessarily force authors into lotteries. In addition, we analyze the limits of the law with respect to complementary institutional regulations and current norms in creative industries.

This paper, based on a large-scale online survey of suppliers conducted by the HSE IIMS in 2017, analyzed various conflict resolution strategies in public procurement. The specific feature of this sphere is the presence of the state as the dominant party in the contractual relationship, and the resulting differences in assessing the chances of protecting one’s interests in court, as well as the effectiveness of judicial conflict resolution mechanisms. At the same time, this paper proceeded from the fact that suppliers differ not only in their practice of resolving conflict situations after the conclusion of a contract but also in the type of behavior that determines the choice of each strategy. The survey results showed that the majority of suppliers prefer to resolve conflicts in public procurement using an out-of-court negotiation with procurers, while only 31% of respondents resort to judicial proceedings. At the same time, suppliers potentially involved in informal relations with procurers, are less likely to go to court and less often use negotiations. The paper will provide a possible explanation for the revealed patterns in the behavior of suppliers.

This paper is a study of the contractual relationship between the employer and the employee viz., the domestic worker. It probes into the international conventions and Indian laws that are concerned with such work. It winds up by cautioning the legislative and legal fraternities to ensure that regulations do not inadvertently become a bane to such workers.

In public-private partnership (PPP) projects, private investors may engage in opportunistic behavior to pursue self-interest. In this paper, based on the contractual relationship between the government and private investors in PPP projects, principal-agent models in the presence of opportunistic tendencies in private investors were constructed to analyze the incentive mechanism for inhibiting investors' opportunistic tendencies in PPP projects. The results show that investors with opportunistic tendencies would be more inclined to invest an optimal level of productive efforts after acquiring a higher proportion of benefits allocation in the project output. Likewise, an increase in incentive intensity would help to lower the level of opportunistic behavior adopted by investors. For investors who are armed with opportunistic tendencies, there exists an optimal level of opportunistic behavior in order to maximize their benefits, and contrary to intuition it is not always the case that a higher level would be better for them. The findings contribute new insights into the development of incentives mechanism between the government and the private investors to collectively work toward creating a “win-win” contract and curbing potential opportunistic behavior.

How do candidates allocate their campaign resources and when do they change their allocations? Using data of over 3.5 million expenditure items submitted by candidates who ran for House seats between 2004 through 2014, we provide a detailed picture of how candidates allocate their limited resources among different categories of activities. Although different candidates running in the same race allocated their campaign resource differently, in the aggregate, monthly expenditure patterns over the course of the campaign period across six election cycles are similar. Also, from one cycle to the next, candidates rarely changed their campaign resource allocations, even when they face varying qualities of challengers, different sets of voters due to redistricting, and increases in outside spending after Citizens United. This suggests that candidates’ expenditure decisions are sticky across election cycles. We show additional evidence of this persistency by documenting repeated contractual relationship with the same consultants and campaign vendors by campaigns.

Duress and undue influence as equitable concepts in the Law of Contract permit an innocent party to withdraw from a subsisting contractual relationship on grounds that the innocent party was induced to accede to such contractual relationship, by reprehensible pressure on the part of the other party; in other words, that as a result of some unconscionable conduct of the part of the other party to the contract, the agreement that gave rise to the contract could not be said to have proceeded from the voluntary choice of the innocent party and as such ought to be annulled. Although the major issue where both or either of duress or undue influence is relied upon to seek to invalidate a contract, is whether the aggrieved party has acted freely, yet duress must be distinguished from undue influence in that the former is usually pleaded as a causative factor to undue influence whereas the latter is relied upon to establish that as a result of duress or other causes, the aggrieved person was deprived of the requisite mental capacity to legitimately and freely make a choice. While it is obvious that presence of such pressure should may constitute a good-enough reason to overturn an otherwise good agreement, it is important to scrutinize belief(s) that inspire resolutions permitting a repudiation of contracts on the basis of either of these concepts with a view to delimiting the exact range of application or effect of each or both of them. This paper examines the question whether duress and undue influence as vitiating factors constitute sufficient legal safeguards against unconscionable contractual transactions. Beginning with a brief look at meaning, types, scope and application of duress and undue influence, the paper proceeds to a consideration of relevant case law and statutory provisions on application of these concepts to unconscionable contracts, and then concludes with a general discussion of the adequacy or otherwise of the law on the subject.

The paper examines the strategic vertical relationship between network and regional airlines. We develop a model to illustrate how network airlines can use the contractual relationship with regional airlines as an efficient tool to simultaneously drive out inefficient network airlines and also accommodate other cost efficient network airlines in any specific market. The model is tested on U.S. data using simultaneous and sequential choice models. We find that market size, cost differences between network airlines, as well as cost differences between network and regional airlines, are the chief determinants of the network airlines’ decisions on whether or not to serve a market with their own fleet, as well as how many regional airlines to contract with.

Portuguese Abstract: Este trabalho tem como tema a relacao entre franqueador e franqueado. Nosso objetivo e explorar as clausulas de nao concorrencia para revelar como estao sendo utilizadas e aplicadas pelos principais franqueadores no Brasil; identificar seus limites. Em que pese a maturidade do sistema, estamos ha mais de 20 anos convivendo com o marco legal do franchising. Do ponto de vista juridico e de qualidade tecnica dos contratos de franquia, ainda precisamos evoluir. O estudo e o desenvolvimento das clausulas de nao concorrencia podem contribuir para o aprimoramento do sistema de franchising. Nesse universo, os franqueadores sao os protagonistas dos negocios e desenvolvedores dos contratos e das clausulas de nao concorrencia que, as vezes, sao abusivas, genericas e sujeitas a relativizacao pelo julgador, gerando inseguranca nas relacoes comerciais entre as partes. A funcao da clausula nao concorrencial e proteger o franqueador, responsavel pela criacao e desenvolvimento do negocio, o know-how, as tecnicas de producao e modelos de gestao que devem ser resguardados, sobretudo de interessados em tirar proveito e obter tal expertise, apos breve relacao com o franqueador. A relacao franqueador/franqueado e rica e propicia a facilitacao ao empresario franqueado – as vezes, inexperiente naquela atividade – do acesso ao know-how da atividade desenvolvida e dos meios de organizacao comercial especificos do negocio, objeto da franquia. Vale ressaltar que a transferencia do know-how e elemento imaterial, essencial ao desenvolvimento da atividade da franquia empresarial. Neste trabalho, nosso questionamento se volta para a possibilidade do impedimento da utilizacao do know-how e da atividade desenvolvida pelo ex-franqueado ao termino da relacao contratual em contextos complexos e especificos. A analise dos dez contratos de franquia que representam cinquenta por cento dos atuais segmentos do setor e reveladora. Todas as clausulas de nao concorrencia possuem preocupantes deficiencias tecnicas. Constatamos a ausencia de requisitos essenciais, estrategicos e de eficiencia, o que pode significar a relativizacao ou nulidade das clausulas de nao concorrencia e, consequentemente, inseguranca juridica. Como solucoes praticas apresentamos a proposta de modulacao das clausulas de nao concorrencia por meio dos requisitos essenciais, estrategicos e de eficiencia, criando duas classes distintas como forma de proporcionar seguranca juridica aos contratos de franquia. Propomos a revisao do marco legal do franchising. English Abstract: The topic of this paper is the relationship between the franchiser and the franchisee. Our goal is to explore the non-compete clauses to unveil how they are being adopted and applied by main franchisors in Brazil; finding its thresholds. Despite the system's maturity, we are living with the legal franchising framework for more than 20 years. From a legal point of view and technical quality of the franchise agreements, we still have a lot to evolve. The study and development of non-compete clauses can improve the franchising system. In this world, franchisors are business players and agreement developers and non-compete clauses that are most the times abusive, generic and subject to relativization by the judge, thus generating uncertainty in business relations between the parties. The role of the non-compete clause is to is to safeguard the franchisor, responsible for the business creation and development, know-how, production techniques and management templates have to be safeguarded, mostly from the ones interested in taking advantage and getting such expertise, after a short relationship with the franchisor. The relationship between the franchiser and the franchisee is rich and conducive to facilitating the franchisee entrepreneur - sometimes inexperienced in that activity - access to the know-how of the activity and means of trade specific business organization, the franchise object. Please note that the transfer of know-how is an immaterial element, key to the development of the activity of the franchise business. In this paper, our questioning turns to the possibility of preventing the use of know-how and activity developed by the former franchisee at the end of the contractual relationship in complex and specific contexts. The review of the ten franchising agreements corresponding to fifty percent of current industries is revealing. All non-compete clauses have worrying technical deficiencies. We noted the lack of key, strategic and efficiency requirements, which can mean the relativization or invalidity of non-compete clauses and as result, legal uncertainty. As practical solutions we present the proposed modulation of non-compete clauses by the essential, strategic and efficiency requirements, creating two different classes as a means to provide legal certainty for franchising agreements. We propose the revision of the legal franchising landmark.

In this note, I extend the work of Echenique (2012) to show that a model of many-to-many matching with contracts may be embedded into a model of many-to-many matching with wage bargaining whenever (1) all agentsʼ preferences are substitutable and (2) the matching with contracts model is unitary , in the sense that every contractual relationship between a given firm–worker pair is specified in a single contract. Conversely, I show that unitarity is essentially necessary for the embedding result.

This paper captures a first detailed attempt to quantitatively analyze the innovation history of the space sector. Building on a communication satellite innovation metric and a spacecraft innovation framework developed as part of an ongoing project, this paper presents a preliminary model of global communication satellite innovation. In addition to innovation being a function of the rate of performance normalized by price, innovation was found to be strongly influenced by characteristics of the customer–contractor contractual relationship. Specifically, Department of Defense contracts tend to result in a lower level of innovation on average as compared to other customers. Also, particular customer–contractor pairs perform differently and exhibit a second order relationship in time.

Russian Abstract: В работе проводится анализ круга вопросов, находящихся в зоне ответственности организации – менеджера сложного капиталоемкого проекта. Данная работа является иллюстрацией опасности недооценки роли «посредника» при реализации сложных проектов в рамках антимонопольного расследования, - без проведения анализа хозяйственной деятельности субъекта это может повлечь за собой ошибочные нормативные выводы. Проведенный анализ иллюстрирует, что как минимум две функции – медиатора и финансового гаранта – невозможно переложить на одну из взаимодействующих сторон без проявления отрицательных аспектов в плане эффективности. В этой связи рекомендуемое антимонопольным органом устранение из договорных отношений компаний-посредников не только не гарантирует снижения цены для покупателя на всю часть вознаграждения посредника, но может привести к обратному эффекту.English Abstract: The paper analyzes the range of issues that are in the organization's area of ​​responsibility - the manager of a complex capital-intensive project. This work is an illustration of the danger of underestimating the role of "mediator" in the implementation of complex projects in the framework of anti-monopoly investigation, - no analysis of the subject of economic activity it can lead to erroneous conclusions regulations. The analysis shows that at least two functions - the mediator and the financial guarantor - it is impossible to pass on one of the communicating parties without showing the negative aspects in terms of efficiency. In this regard, it recommended the elimination of the antimonopoly body of the contractual relationship intermediary companies not only ensures reduction in the price to the buyer for the rest of the broker fees, but can lead to the opposite effect.

This article sets out to highlight some of the legal constraints and considerations which are unique to Internet access contracts and, in addition, looks at the development of such contracts in the light of existing and anticipated regulatory developments.

The paper analyses the behaviour of a high-tech system company in a model where her strategic variable is the choice of the contractual relationship with component producers . The system company develops an optimal contractual design separating component producers’ qualities and providing optimal incentives to them. The particular features of the system company generate, however, a static and an intertemporal dilemma in her optimising behaviour. The static dilemma is between: (i) releasing property rights to component producers to increase their incentives and (ii) maintaining more control on ‘strategic’ components to improve her ‘systemic’ capacity. The intertemporal dilemma is about the optimal share of property rights on component products to maintain in a framework in which the ‘strategic/non strategic’ feature of individual components varies over time. Both static and intertemporal dilemmas have effects on the divergence between the system company optimum and the socially optimum level of technological development.

In this paper the contractual relationship between owner and Engineering Contractor during the development and implementation of capital investment projects is considered. The described Cost Plus Incentive Fee contract type provides a mechanism for allocating project cost risk to the owner, being the party best placed to bear the cost risk consequences and providing a performance incentive for the Engineering Contractor, being the party best placed to manage the cost risk. The results of an analysis of eight case studies involving major capital investment projects from the oil and chemicals industry are presented and a quantitative methodology for structuring incentive schemes is described and illustrated.

Using a unique sample of rotating savings and credit association (Rosca) members from Jamaica, we provide the first econometric tests of the recent theoretical advances in the literature on Roscas, and find considerable support for an economic theory of Roscas. We find, for example, that payments to the Rosca leader significantly enhance the sustainability of the Rosca, and that the contractual relationship between the leader and other Rosca members is `transaction cost minimizing' — when the degree of asset specificity is higher the contract is more flexible. Other theoretical predictions we validate are the inverse relationship between size of Rosca and size of contribution, and the use of Rosca funds for durable goods purchase.

Spanish Abstract: La externalizacion de determinadas actividades constituye una herramienta de gestion empresarial, cuya mayor o menor eficiencia depende, en gran parte, de la correcta elaboracion y negociacion del contrato que regula las relaciones entre los contratantes. El contrato de outsourcing es complejo y requiere una estrecha colaboracion entre las partes para la correcta consecucion de su objeto. En este estudio, que no pretende ser un analisis exhaustivo de todas las clausulas que el contrato de outsourcing debe recoger, se intenta reflejar algunas conclusiones de naturaleza eminentemente practica sobre determinados puntos que, por su importancia o caracter controvertido, podran ser utiles para aquellos profesionales que se dedican a la negociacion de este tipo de contratos.English Abstract: The outsourcing of certain activities is a business management tool. The efficiency of such tool relies on the accurate draft and negotiation of the agreement that must govern the contractual relationship between the contracting parties. The outsourcing agreement is a complex agreement requiring a close cooperation between the parties to secure a successful fulfillment of its scope. This paper does not seek to be an exhaustive analysis of all the provisions that an outsourcing contract should include. Instead, it only tries to consider some eminently high-level practical views on some key and controversial items, which might be useful to professionals engaged in the negotiation of this type of contracts.

International audience; In this paper the authors show that, in the presence of buyer and seller power, a monopolist can enter into a costly contractual relationship with a low-quality supplier with the sole intention of improving its bargaining position relative to a high-quality supplier, without ever selling the good produced by that firm.

A factor capturing the returns of strategies exploiting the low beta anomaly has signi ficant explanatory power in the time-series and cross-section of hedge fund returns. Controlling for the exposure towards this factor drives risk-adjusted returns (alpha) of most hedge fund style returns to zero. In the cross-section, hedge funds with a high loading on low beta strategies outperform funds with a low loading by 0.88% monthly on a risk-adjusted basis in the period from 1999-2008. In line with theory, the cross-sectional dispersion in the exposure to low beta strategies is driven by the access to leverage and the contractual relationship between hedge fund managers and investors.

Live in Relationship is contractual relationship. There is offer and acceptance between parties to live in relationship so such relationship should be framed within ambit of law. We need special legal rules to deal with consequences of such relationship.

Federal False Claims Act cases involve relators who come forward with evidence of fraud and enter into what is usually a long-term contractual relationship with the federal government leading to a relator share. In this article, Wood asserts that the resulting relator share in those cases should be taxed as capital gain, not as ordinary income.

In this paper we study contract formation in a standard insurance model with one-sided ambiguity: the agent is ambiguous about the likelihood of relevant events while the insurer does not face ambiguity but is aware of the fact that the agent does. We argue that a contract offer can potentially transfer this informational advantage to the insured. This leads us to model contract formation as a signaling game. We show that both pooling and separating equilibria exist but only one - the most protable full insurance pooling contract - is a perfect sequential equilibrium. We believe this result to be relevant for the following reasons. First, the main idea of the paper is that when we analyze contract formation in the presence of ambiguity the information channeled through contracts needs to be taken into account carefully. Second, it implies that the insurer prefers not to disclose her information, which is an empirically relevant finding. Third, the result easily carries over to any contractual relationship between an expert and an uninformed agent and would predict experts to be reluctant to share information.

The English version of this paper can be found at http://ssrn.com/abstract= 2019474.Spanish Abstract: Para algunos tratadistas juridicos “las cartas de credito” no son contratos; existe la percepcion de que la obligacion es unica en sus caracteristicas y los principios de las leyes contractuales no son aplicables para la “carta de credito”. Algunos han tratado de sostener que ha surgido un vinculo contractual entre el banco encargado de emitir la “carta de credito” y las partes involucradas en la transaccion; sin embargo, ninguno de los sistemas legales ha tenido exito en definir un esquema contractual para la figura de “la carta de credito”. La teoria de la estipulacion para el beneficio de un tercero ha sido uno de los enfoques que se ha tenido en cuenta para establecer un vinculo contractual de “la carta de credito”. Obviamente dentro de este enfoque el comprador se situa como el otorgador, el banco como el promitente, y el vendedor como el beneficiario. Muchos conflictos emergen bajo ese enfoque que impiden tipificar la “carta de credito” como un contrato. Otro enfoque menos obvio puede ser que considere al comprador como el tercero beneficiario de la relacion entre el banco y el vendedor. Este punto de vista es viable si se considera la teoria de la “causa” propuesta por Jean Domat, en la cual determina que “la razon del compromiso contractual esta fundamentada en lo que cada una de las partes otorga a la otra siendo esta la causa del contrato”. El presente ensayo evalua la posibilidad de tipificar la “carta de credito” con la teoria contractual de la estipulacion para el beneficio de un tercero desde el punto de vista en el que el comprador es el tercero beneficiario.English Abstract: For some authors “letters of credit” are not contracts; there is the perception that the obligation is unique in its characteristics and no principles of contract law apply to “letters of credit”. Some attempts to support a contractual link between the issuing bank and the parties involved in the “letter of credit” transaction have emerged; however, none of the legal systems have succeeded in defining a contractual scheme for “letters of credit”. The theory of the stipulation for the benefit of a third party has been one of the approaches that has been considered in establishing a contractual link to “letters of credit”. The most obvious approach to relate “letters of credit” with the theory of the stipulation for the benefit of a third party is to place the purchaser of goods as the stipulator, the bank as the promisor, and the seller as the beneficiary. However, several conflicting factors emerged from this arrangement. Another less obvious approach could be to consider the buyer as the third party beneficiary of the proposed contractual relationship between the banker and the seller. This point of view is viable if one considers the civil law theory of “cause” proposed by Jean Domat, which states that "In business contracts, the cause of the engagement of one of the parties is what the other party gives him, or engages to give him.” This paper evaluates the feasibility of linking “letters of credit” with the contractual theory of the stipulation for the benefit of a third party under the point of view that the buyer is the third party beneficiary.

Recently several judgments have been entered in Israel, extending the liability of banks providing construction loans to building constructors. According to this position, the banks are liable towards various third parties which are bound by a contractual relationship with the constructor, although the bank itself has no direct contractual link vis-a-vis such parties. Such liability has already been recognized by the courts in Israel thus far with respect to purchasers of apartments or other units in a project, as well as towards sub-contractors performing various works on behalf of the constructor, when the constructor has received finance from the bank. However, according to this approach, liability towards additional third parties may be recognized as well. The article reviews the bank's liability toward third parties in cases of construction loans.

In this Paper, we provide a novel rationale for credit ratings. The rationale that we propose is that credit ratings can serve as a coordinating mechanism in situations where multiple equilibria can obtain. We show that credit ratings provide a 'focal point' for firms and their investors. We explore the vital - but previously overlooked - implicit contractual relationship between a credit rating agency and a firm. Credit ratings can help fix the desired equilibrium and as such play an economically meaningful role. Our model provides several empirical predictions and insights regarding the expected price impact of ratings changes, the discreteness in funding cost changes, and the effect of the focus of organizations on the efficacy of credit ratings.

Three different issues, related to third party involvement in a contractual relationship, are examined. The first two (assignment of contractual rights/delegation of contractual duties and third-party beneficiary contracts) are examined in a unified way. After pointing to the striking similarity between beneficiary and assignment contracts, we discuss the non-simultaneous assent argument, the danger of creating open classes of beneficiaries without the intention of the contracting parties, and other problems. In a second part, we deal with the controversial issue of efficient breach due to inducement by a third party. After reviewing the literature, we briefly consider the use of liquidated damages as an instrument that is better-suited than a tort for the protection of the subjective valuation and the risk aversion of the promisee.

Current law and economics literature identifies two main types of errors courts can make in applying antitrust law. Courts may erroneously label a conduct as anti-competitive although competition is not harmed. Alternatively, courts may fail to identify anti-competitive conduct and thus fail to attack it. This article focuses on a third possible error where a court identifies, correctly, anti-competitive conduct but its mode of interference, its proscribed remedy, harms competition. It analyzes such error in the context of anti-competitive contract reformation. Such error occurs, for example, where a court has chosen a reformation option that is less efficient and effective than an alternative reformation option. Accordingly, this article identifies a set of clear and coherent principles for contract reformation in order to eliminate, or at least reduce, the occurrence of the third error. The analysis moves beyond the received wisdom that contract reformation should simply sever the anti-competitive parts of a contract if so doing does not alter the nature of the contract, and suggests that in most cases courts should invalidate the contractual relationship in its entirety.

The contribution analysis the requirements for the legally binding character of agreements and/or promises. It tries to give a theoretical foundation linked to lessons from social sciences and analyses some traditional rules and concepts in that light. If further deals with the different sources of the content of a contractual relationship. Finally, it analysis the delimitation of questions of formation and validity and those of performance and non-performance.