When, and why, might it be thought immoral to commit a breach of contract? The answer to this fundamental question is not obvious, because, as is stressed, and as has been overlooked in addressing the question, contracts do not usually provide explicitly for the particular events that are observed to occur. When a contract does not expressly address a contingency that occurs, the morality of breach is assumed here to depend on what the contract would have said had it addressed the contingency. This assumption is explained to imply that breach is not immoral if expectation damages would have to be paid for breach, but that breach might be immoral if damages are less than the true expectation, as is probable. This conclusion is related to the results of a survey that was conducted of individuals' attitudes toward the morality of breach. The conclusion is also related to the views of commentators on the morality of breach and of those on the "efficiency" of breach.
{"title":"Is Breach of Contract Immoral","authors":"S. Shavell","doi":"10.2139/SSRN.868592","DOIUrl":"https://doi.org/10.2139/SSRN.868592","url":null,"abstract":"When, and why, might it be thought immoral to commit a breach of contract? The answer to this fundamental question is not obvious, because, as is stressed, and as has been overlooked in addressing the question, contracts do not usually provide explicitly for the particular events that are observed to occur. When a contract does not expressly address a contingency that occurs, the morality of breach is assumed here to depend on what the contract would have said had it addressed the contingency. This assumption is explained to imply that breach is not immoral if expectation damages would have to be paid for breach, but that breach might be immoral if damages are less than the true expectation, as is probable. This conclusion is related to the results of a survey that was conducted of individuals' attitudes toward the morality of breach. The conclusion is also related to the views of commentators on the morality of breach and of those on the \"efficiency\" of breach.","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2005-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.868592","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67846365","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This essay attempts to achieve the same goal for the complex and confusing topic of sovereign debt restructuring that the "Idiot's Guide" series of books achieve for their covered topics: to provide a systematic, accessible, and easy-to-grasp overview, so that readers can understand issues in context and go on to more advanced study. The essay also compares and contrasts public-law and private-law approaches to sovereign debt restructuring.
{"title":"'Idiot's Guide' to Sovereign Debt Restructuring","authors":"S. Schwarcz","doi":"10.2139/SSRN.487022","DOIUrl":"https://doi.org/10.2139/SSRN.487022","url":null,"abstract":"This essay attempts to achieve the same goal for the complex and confusing topic of sovereign debt restructuring that the \"Idiot's Guide\" series of books achieve for their covered topics: to provide a systematic, accessible, and easy-to-grasp overview, so that readers can understand issues in context and go on to more advanced study. The essay also compares and contrasts public-law and private-law approaches to sovereign debt restructuring.","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"53 1","pages":"1189"},"PeriodicalIF":0.0,"publicationDate":"2004-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.487022","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67748963","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article takes a fresh look at veil-piercing jurisprudence, a notoriously incoherent area of the law. I argue that a sensible approach to veil-piercing requires careful attention to the appropriate policy basis for limited liability. Despite heroic efforts of some commentators, shareholder limited liability for contract as well as tort claims and for public as well as closely-held corporations cannot be defended on efficiency grounds alone. Instead, limited liability should be understood as an effort to subsidize business activity by redistributing wealth from corporate creditors to shareholders. The subsidy idea is more obvious as to tort claimants, but it may also be at work in the contract area too. Contract creditors have the opportunity to bargain for compensation for the increased of risk of nonpayment presented by limited liability. Nevertheless, recent research in behavioral economics suggests that the limited liability default rule may have distributional consequences in this setting as well. If limited liability amounts to a subsidy paid by contract and tort creditors to business investors, the policy question then is, how large should this subsidy be? I argue that overly broad limited liability imposes too great a cost on corporate creditors. This is because limited liability can facilitate opportunistic efforts by shareholders to extract value from third parties without consent or compensation. They can do this by increasing the risk of corporate default beyond the level accepted by contracting parties or by engaging in risky activities that have the potential to cause harm that the corporate tortfeasor cannot redress. One consequence of the threat of opportunism is to raise the cost of credit for all corporate borrowers ("good" as well as "bad" types). If the purpose of limited liability is to encourage investment by shielding shareholders from the risk of corporate insolvency, the social costs of this benefit may therefore be too high. The scope of limited liability should instead be restricted to cases of corporate insolvency that occur in spite of shareholders' good faith efforts to manage their firm in a manner that respects creditor interests. This limitation would still provide investors with protection from what should be their real concern, the possibility of corporate insolvency arising from events or circumstances that cannot be foreseen or avoided. I propose that courts limit limited liability to shareholders who have managed their corporation in a financially responsible manner. As to contract creditors, this means realistic evaluation of the corporation's ability to repay a debt at the time it is incurred and avoidance of actions that unreasonably increase the risk of default thereafter. As to potential tort victims, shareholders act responsibly if they purchase liability insurance against foreseeable risks. Financial responsibility thus has nothing necessarily to do with the amount of capital contributed to the busi
{"title":"Piercing the Corporate Veil, Financial Responsibility, and the Limits of Limited Liability","authors":"David K. Millon","doi":"10.2139/SSRN.451520","DOIUrl":"https://doi.org/10.2139/SSRN.451520","url":null,"abstract":"This article takes a fresh look at veil-piercing jurisprudence, a notoriously incoherent area of the law. I argue that a sensible approach to veil-piercing requires careful attention to the appropriate policy basis for limited liability. Despite heroic efforts of some commentators, shareholder limited liability for contract as well as tort claims and for public as well as closely-held corporations cannot be defended on efficiency grounds alone. Instead, limited liability should be understood as an effort to subsidize business activity by redistributing wealth from corporate creditors to shareholders. The subsidy idea is more obvious as to tort claimants, but it may also be at work in the contract area too. Contract creditors have the opportunity to bargain for compensation for the increased of risk of nonpayment presented by limited liability. Nevertheless, recent research in behavioral economics suggests that the limited liability default rule may have distributional consequences in this setting as well. If limited liability amounts to a subsidy paid by contract and tort creditors to business investors, the policy question then is, how large should this subsidy be? I argue that overly broad limited liability imposes too great a cost on corporate creditors. This is because limited liability can facilitate opportunistic efforts by shareholders to extract value from third parties without consent or compensation. They can do this by increasing the risk of corporate default beyond the level accepted by contracting parties or by engaging in risky activities that have the potential to cause harm that the corporate tortfeasor cannot redress. One consequence of the threat of opportunism is to raise the cost of credit for all corporate borrowers (\"good\" as well as \"bad\" types). If the purpose of limited liability is to encourage investment by shielding shareholders from the risk of corporate insolvency, the social costs of this benefit may therefore be too high. The scope of limited liability should instead be restricted to cases of corporate insolvency that occur in spite of shareholders' good faith efforts to manage their firm in a manner that respects creditor interests. This limitation would still provide investors with protection from what should be their real concern, the possibility of corporate insolvency arising from events or circumstances that cannot be foreseen or avoided. I propose that courts limit limited liability to shareholders who have managed their corporation in a financially responsible manner. As to contract creditors, this means realistic evaluation of the corporation's ability to repay a debt at the time it is incurred and avoidance of actions that unreasonably increase the risk of default thereafter. As to potential tort victims, shareholders act responsibly if they purchase liability insurance against foreseeable risks. Financial responsibility thus has nothing necessarily to do with the amount of capital contributed to the busi","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2003-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.451520","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67735340","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The terrorist attacks of September 11 and the subsequent War Against Terrorism have raised in many minds the possibility of a massive, perhaps nuclear, terrorist attack laying waste to all of Washington, D.C., killing the President and Vice President and destroying Congress and the federal government. President Bush's "shadow government," composed of members from each federal executive agency working from an undisclosed secure location, ready to step-in in the wake of an attack, reflects this newfound concern with continuity in the federal government. This Article considers the constitutional and structural problems raised by the terrorist attack scenario and the plans for government continuity. First, President Bush's plan (details of which have not been shared with the public) does not obviously provide for the safety of a proper statutory successor to the President, one person who will assume and exercise the "executive power" under the Constitution. Second, the plan does not appear to provide for continuity of Congress, but instead assumes that the executive branch alone provides sufficient continuity in the federal government without a functioning legislative branch. Third, there has been no discussion of the more important aspect of government continuity, the repopulation of the federal government and the replacement of those high officials in both political branches killed in any attack so as to bring the government up to full working speed. Most importantly, repopulation demands action not by the federal government, but by the several States, which are responsible for choosing, or controlling the process of choosing, new members of Congress and new Electors to choose a new President. This Article then suggests how succession, continuity, and, most importantly, repopulation of the federal government should function, through several proposed constitutional amendments and statutory changes that will enable the governmental structure to handle the new contingency and survive in a structurally and constitutionally sound and consistent form.
{"title":"The Trouble with Shadow Government","authors":"H. Wasserman","doi":"10.2139/SSRN.421540","DOIUrl":"https://doi.org/10.2139/SSRN.421540","url":null,"abstract":"The terrorist attacks of September 11 and the subsequent War Against Terrorism have raised in many minds the possibility of a massive, perhaps nuclear, terrorist attack laying waste to all of Washington, D.C., killing the President and Vice President and destroying Congress and the federal government. President Bush's \"shadow government,\" composed of members from each federal executive agency working from an undisclosed secure location, ready to step-in in the wake of an attack, reflects this newfound concern with continuity in the federal government. This Article considers the constitutional and structural problems raised by the terrorist attack scenario and the plans for government continuity. First, President Bush's plan (details of which have not been shared with the public) does not obviously provide for the safety of a proper statutory successor to the President, one person who will assume and exercise the \"executive power\" under the Constitution. Second, the plan does not appear to provide for continuity of Congress, but instead assumes that the executive branch alone provides sufficient continuity in the federal government without a functioning legislative branch. Third, there has been no discussion of the more important aspect of government continuity, the repopulation of the federal government and the replacement of those high officials in both political branches killed in any attack so as to bring the government up to full working speed. Most importantly, repopulation demands action not by the federal government, but by the several States, which are responsible for choosing, or controlling the process of choosing, new members of Congress and new Electors to choose a new President. This Article then suggests how succession, continuity, and, most importantly, repopulation of the federal government should function, through several proposed constitutional amendments and statutory changes that will enable the governmental structure to handle the new contingency and survive in a structurally and constitutionally sound and consistent form.","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"52 1","pages":"281"},"PeriodicalIF":0.0,"publicationDate":"2003-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68734481","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A look at the rights and entitlements of posthumously conceived children: no surefire way to tame the reproductive Wild West.","authors":"Margaret Ward Scott","doi":"","DOIUrl":"","url":null,"abstract":"","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"52 2","pages":"963-96"},"PeriodicalIF":0.0,"publicationDate":"2003-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"40892713","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Walking the talk of trust in human subjects research: the challenge of regulating financial conflicts of interest.","authors":"Robert Gatter","doi":"","DOIUrl":"","url":null,"abstract":"","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"52 1","pages":"327-401"},"PeriodicalIF":0.0,"publicationDate":"2003-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"24838786","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Research, regulations, and responsibility: confronting the compliance myth--a reaction to Professor Gatter.","authors":"Greg Koski","doi":"","DOIUrl":"","url":null,"abstract":"","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"52 1","pages":"403-16"},"PeriodicalIF":0.0,"publicationDate":"2003-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"24838787","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
One hundred years ago in the United States, confronted by the urgent need to find a debt workout procedure for large corporate and railroad bond issuers, the financial community looked at three options: amend the U.S. bankruptcy law to permit reorganizations (the predecessor of today's Chapter 11), not just liquidations of the debtor companies; include contractual provisions in the underlying bonds that would allow a restructuring of those instruments with the consent of a supermajority of the bondholders; or pursue a court-supervised debt restructuring by engaging the equitable powers of the civil courts to oversee such a process. A century later, confronted by the urgent need to find a debt workout procedure for sovereign bond issuers, the same three options are open for discussion. The International Monetary Fund is actively studying the possibility of constructing, at the supranational level, the equivalent of a "Chapter 11 for countries." The use of contractual provisions to facilitate sovereign debt workouts - an idea whose time had visibly not come even just a few years ago - is being reconsidered by both the sovereign borrowers and the institutional bondholder community in the light of Argentina's catastrophic debt default in December 2001. Resort to the equitable powers of the civil courts to oversee creditor-led sovereign debt workouts is, we believe, possible in appropriate circumstances. This article looks at the existing contractual provisions in sovereign bonds and the existing U.S. legal procedures in order to explore how far these may be enlisted to further the goal of orderly sovereign debt rearrangements. This article concludes that these existing contractual provisions and civil procedures - if used creatively and confidently - can go much further toward achieving this goal than conventional wisdom would suggest.
{"title":"Sovereign Bonds and the Collective Will","authors":"L. Buchheit, G. Gulati, A. Mody","doi":"10.2139/SSRN.346884","DOIUrl":"https://doi.org/10.2139/SSRN.346884","url":null,"abstract":"One hundred years ago in the United States, confronted by the urgent need to find a debt workout procedure for large corporate and railroad bond issuers, the financial community looked at three options: amend the U.S. bankruptcy law to permit reorganizations (the predecessor of today's Chapter 11), not just liquidations of the debtor companies; include contractual provisions in the underlying bonds that would allow a restructuring of those instruments with the consent of a supermajority of the bondholders; or pursue a court-supervised debt restructuring by engaging the equitable powers of the civil courts to oversee such a process. A century later, confronted by the urgent need to find a debt workout procedure for sovereign bond issuers, the same three options are open for discussion. The International Monetary Fund is actively studying the possibility of constructing, at the supranational level, the equivalent of a \"Chapter 11 for countries.\" The use of contractual provisions to facilitate sovereign debt workouts - an idea whose time had visibly not come even just a few years ago - is being reconsidered by both the sovereign borrowers and the institutional bondholder community in the light of Argentina's catastrophic debt default in December 2001. Resort to the equitable powers of the civil courts to oversee creditor-led sovereign debt workouts is, we believe, possible in appropriate circumstances. This article looks at the existing contractual provisions in sovereign bonds and the existing U.S. legal procedures in order to explore how far these may be enlisted to further the goal of orderly sovereign debt rearrangements. This article concludes that these existing contractual provisions and civil procedures - if used creatively and confidently - can go much further toward achieving this goal than conventional wisdom would suggest.","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"51 1","pages":"1317"},"PeriodicalIF":0.0,"publicationDate":"2002-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.346884","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68596661","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The question of whether to enforce agreements to implant frozen embryos after divorce has become a major concern for the 300 clinics and thousands of couples who use infertility services every year. Although courts in New York and Tennessee support enforcement, recent decisions by appellate courts in Massachusetts and New Jersey have refused to enforce such agreements on the ground that courts should not force people to reproduce. This article analyzes conflicts over enforcement of agreements for disposition of frozen embryos in terms of the precommitment strategies that persons use to plan their lives. It shows that refusal to enforce contracts for frozen embryos is unfair to the parties who relied on them in undertaking invasive infertility treatments, and possibly unconstitutional. It also addresses the extent to which precommitments for rearing rights and duties in resulting children should be enforced, if agreements to implant embryos are recognized.
{"title":"Precommitment stategies [sic] for disposition of frozen embryos.","authors":"J. Robertson","doi":"10.2139/SSRN.315374","DOIUrl":"https://doi.org/10.2139/SSRN.315374","url":null,"abstract":"The question of whether to enforce agreements to implant frozen embryos after divorce has become a major concern for the 300 clinics and thousands of couples who use infertility services every year. Although courts in New York and Tennessee support enforcement, recent decisions by appellate courts in Massachusetts and New Jersey have refused to enforce such agreements on the ground that courts should not force people to reproduce. This article analyzes conflicts over enforcement of agreements for disposition of frozen embryos in terms of the precommitment strategies that persons use to plan their lives. It shows that refusal to enforce contracts for frozen embryos is unfair to the parties who relied on them in undertaking invasive infertility treatments, and possibly unconstitutional. It also addresses the extent to which precommitments for rearing rights and duties in resulting children should be enforced, if agreements to implant embryos are recognized.","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"50 4 1","pages":"989-1046"},"PeriodicalIF":0.0,"publicationDate":"2002-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.315374","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68566777","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Taking another look at the definition of an embryo: President Bush's criteria and the problematic application of federal regulations to human embryonic stem cells.","authors":"Simon B Auerbach","doi":"","DOIUrl":"","url":null,"abstract":"","PeriodicalId":81162,"journal":{"name":"Emory law journal","volume":"51 4","pages":"1557-604"},"PeriodicalIF":0.0,"publicationDate":"2002-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"24579291","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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