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Showing papers on "Principal (commercial law) published in 2006"


Posted Content
TL;DR: A comprehensive overview of the law and practice of the World Trade Organization can be found in this article, where the authors discuss the main substantive obligations of the WTO regime, including tariffs, quotas, and MFN.
Abstract: The WTO is one of the most important intergovernmental organizations in the world, yet the way in which it functions as an organization and the scope of its authority and power are still poorly understood. This comprehensively revised new edition of the acclaimed work by an outstanding team of WTO law specialists provides a complete overview of the law and practice of the WTO. The authors begin with the institutional law of the WTO (such as the sources of law and remedies of the dispute settlement system), then tackle the principal substantive obligations of the WTO regime (including tariffs, quotas, and MFN). They then move on to consider unfair trade, regional trading arrangements, and developing countries. In its final section the book deals with the consequences of globalization: firstly, where free trade is seen to be incompatible with environmental protection and, secondly, where WTO law confronts legal regimes governing issues of competition and intellectual property.

123 citations


Journal Article
TL;DR: Black and Cheffins as mentioned in this paper describe the almost impenetrable windows within which outside directors may be personally liable for good faith conduct, and they conclude that neither move will make a large difference in practice, given the mediating effects of insurance, indemnification, and settlement incentives.
Abstract: Outside directors can fail to do a good job, sometimes spectacularly. Yet outside directors of U.S. public companies who fail to meet what we call their "vigilance duties" under corporate, securities, bankruptcy, environmental, and other laws almost never face personal liability. This paper describes the almost impenetrable windows within which outside directors may be personally liable for good faith conduct. The principal liability window is under securities law, for a seriously rich (hence worth chasing) director of an insolvent company, where damages exceed the DO barely open under securities law, but only if the firm is bankrupt -maps poorly (we argue) onto the policy factors that should inform director liability. We therefore consider whether the right policy move is toward greater liability of outside directors under corporate law, less liability under securities law, or some of both. We conclude that neither move will make a large difference in practice, given the mediating effects of insurance, indemnification, and settlement incentives. In a companion paper, Bernard Black & Brian Cheffins, Outside Director Liability and Reputational Sanctions Across Countries, we argue that a barely open liability window is likely to be a stable solution, both politically and in the D&O insurance market, and that a barely open window may strike a sensible balance between wanting directors to be aware of potential liability while wanting good candidates to neither avoid becoming directors nor to be overly risk-averse. The details of the window's shape may have only a second-order effect on director behavior.

114 citations


Journal ArticleDOI
TL;DR: The American Society of International Law (ASIL) was founded in 1906 to promote the establishment and maintenance of international relations on the basis of law and justice as discussed by the authors, and the Journal (AJIL) is the Society's principal publication.
Abstract: The American Society of International Law (ASIL), incorporated by Act of Congress in 1950, was founded in 1906 “to promote the establishment and maintenance of international relations on the basis of law and justice.” As we celebrate the centennial of this, the Society’s principal publication, it is appropriate to examine the present and future prospects of this project. Is it still a compelling aspiration in the era of U.S. superpower-dom? The founding of the Society and initiation of the Journal (AJIL) must be seen in the context of the then-prevalent American commitment to the idea that a world of international law and international tribunals would be a natural, even historically inevitable, extrapolation of a good American idea. Speaking in 1890 to the first Pan-American Conference, President Benjamin Harrison congratulated the delegates on formulating a hemispheric arbitration agreement. “We rejoice,” he said, “that you have found in the organization of our Government something suggestive and worthy of imitation.” At The Hague in 1907, Secretary of State Elihu Root, the founding president of the ASIL, called for the creation of an international court “which would pass upon questions between nations with the same impartial and impersonal judgment that the Supreme Court of the United States gives to questions arising between citizens of the different States.”

92 citations


Journal ArticleDOI
TL;DR: In this paper, the authors provide a methodological approach for deciding the many issues raised by this case, mainly by focusing on a strict separation between primary and secondary rules of international law, with this approach being both theoretically and practically desirable.
Abstract: In the past years international law has made strides in establishing individual responsibility for crimes against international law as one of its most fundamental principles. This year, however, provides us with the first opportunity for adjudication on state responsibility for genocide in the case brought before the International Court of Justice by Bosnia and Herzegovina against Serbia and Montenegro. This article attempts to provide a methodological approach for deciding the many issues raised by this case, mainly by focusing on a strict separation between primary and secondary rules of international law, with this approach being both theoretically and practically desirable. The article also deals with the question of state responsibility for acts of non-state actors on the basis of state de facto control. By applying this general methodology to the facts of the Genocide case, the article will show that the principal difficulties the Court will face if it decides to use this approach will not be in applying the relevant substantive law, but in establishing the facts and assessing the available evidence.

69 citations


Journal ArticleDOI
TL;DR: In this paper, the optimal regulation of a firm that undertakes an environmentally risky activity is characterized, and the level of safety care exerted by the agent is nonobservable.
Abstract: We characterize the optimal regulation of a firm that undertakes an environmentally risky activity. This firm (the agent)is protected by limited liability and bound by contract to a stakeholder (the principal). The level of safety care exerted by the agent is nonobservable. This level of care depends both on the degree of incompleteness of the regulatory contract and on the allocation of bargaining power between the principal and the agent. Increasing the wealth of the principal that can be seized upon an accident has no value when private transactions are regulated but might otherwise strictly improve welfare. An incomplete regulation supplemented by an ex post extended liability regime can sometime achieve the second best.

57 citations


Posted Content
TL;DR: Cheffins et al. as discussed by the authors analyzed the degree to which outside directors of public companies are exposed to out-of-pocket liability risk -the risk of paying legal expenses or damages pursuant to a judgment or settlement agreement that are not fully paid by the company or another source, or covered by directors' and officers' (D&O) liability insurance.
Abstract: This Article analyzes the degree to which outside directors of public companies are exposed to out-of-pocket liability risk - the risk of paying legal expenses or damages pursuant to a judgment or settlement agreement that are not fully paid by the company or another source, or covered by directors' and officers' (D&O) liability insurance. Recent settlements in securities class actions involving WorldCom and Enron, in which lead plaintiffs succeeded in extracting out-of-pocket payments from outside directors, have led to predictions that such payments will become common. We analyze the out-of-pocket liability risk facing outside directors empirically, legally, and conceptually and show that this risk is very low, far lower than many commentators and board members believe, notwithstanding the WorldCom and Enron settlements. Our extensive search for instances in which outside directors of public companies have made out-of-pocket payments turned up thirteen cases in the last twenty-five years. Most involve fact patterns that should not recur today for a company with a state-of-the-art D&O insurance policy. We offer a detailed assessment of the liability risk outside directors face in trials under corporate and securities law, including settlement dynamics. We argue that, going forward, if a company has a D&O policy with appropriate coverage and sensible limits, outside directors will be potentially vulnerable to out-of-pocket liability only when (1) the company is insolvent and the expected damage award exceeds those limits, (2) the case includes a substantial claim under section 11 of the Securities Act or an unusually strong section 10(b) claim, and (3) there is an alignment between outside directors' or other defendants' culpability and their wealth. Absent facts that fit or approach this perfect-storm scenario, directors with state-of-the-art insurance policies face little out-of-pocket liability risk, and even in a perfect storm they may not face out-of-pocket liability. The principal threats to outside directors who perform poorly are the time, aggravation, and potential harm to reputation that a lawsuit can entail, not direct financial loss. A companion article, Brian Cheffins & Bernard Black, Outside Director Liability Across Countries, 84 Texas Law Review 1385-1480 (2006), http://ssrn.com/abstract=438321, studies six comparison common-law and civil-law countries (Australia, Britain, Canada, France, Germany, and Japan). This article and Outside Director Liability Across Countries are the most fully developed of our articles on outside director liability. Earlier pieces of this overall project are listed below. http://ssrn.com/abstract=382422 (a pre-Enron and WorldCom version of this article) http://ssrn.com/abstract=878135 (policy analysis) http://ssrn.com/abstract=628223 (study of Korea) http://ssrn.com/abstract=682507 (summary article for a finance audience) http://ssrn.com/abstract=800584 (Germany-centered) http://ssrn.com/abstract=800604 (German language version of Germany-paper) http://ssrn.com/abstract=590913 (summary for practitioner audience)

52 citations


Posted Content
TL;DR: Health care providers and tort reformers claim that the medical malpractice litigation system is rife with behaviors that are irrational, unpredictable, and counter-productive as discussed by the authors, and they attack civil juries, asserting that verdicts are skyrocketing without reason, are highly variable, and bear little or no relation to the merits of plaintiffs' claims.
Abstract: Health care providers and tort reformers claim that the medical malpractice litigation system is rife with behaviors that are irrational, unpredictable, and counter-productive. They attack civil juries, asserting that verdicts are skyrocketing without reason, are highly variable, and bear little or no relation to the merits of plaintiffs' claims. They complain about patients, arguing that the few with valid claims sue rarely, while the many who receive non-negligent treatment sue all the time. They attack greedy lawyers, alleging that they rake in obscene profits by routinely filing frivolous complaints. Many of the preceding claims are facially implausible. The medical malpractice liability system is an enormous market whose principal trading partners - trial lawyers and liability insurers - are sophisticated, economically-oriented repeat players. They run the system, and they have the knowledge and incentives to select efficient means to accomplish their respective ends. Given this backdrop, their behavior and the behavior of the system they administer should not be random, or even particularly hard to explain. Nor, given the absence of market power and barriers to entry, should attorneys earn more than market-driven returns on the services they provide. Most of the preceding claims are also inconsistent with empirical studies of the medical malpractice liability system. These studies depict a system that is stable and predictable, that sorts valid from invalid claims reasonably well, and that responds mainly to changes in the frequency of errors and the cost of dealing with them. The system does have a number of pathologies, however, including its loading costs, the snail's pace at which it processes claims, and its failure to compensate patients injured by medical negligence as fully and as often as it should. It is possible to reform the liability system to address these shortcomings, but tort reform proposals like caps on non-economic damages and attorneys fees will not do so. The goal of these proposals is to reduce insurance prices by making the system less remunerative for claimants. If implemented, these measures will predictably worsen the problem of under-compensation, and weaken providers' incentives to protect patients from avoidable perils.

41 citations


Journal ArticleDOI
TL;DR: In this paper, the authors propose a framework to analyze the relationship between each principal-agent pair not as an isolated entity but as a part of an entire market where several principals and agents interact.
Abstract: A large set of literature contributing to the theory of incentives analyzes optimal contracts in principal-agent relationships when there exist asymmetries of information. When this asymmetry concerns an action, or a decision to be made by an agent, a moral hazard problem emerges. Several works analyze optimal contracts when only one principal and one agent interact, including the seminal works by Pauly (1968), Mirlees (1976), and Harris and Raviv (1978). The principal-agent contracts involve the provision of incentives and typically lead to inefficiency due to the informational asymmetry. The main goal of this paper is to propose a useful framework to analyze the relationship between each principal-agent pair not as an isolated entity but as a part of an entire market where several principals and agents interact. In this framework, the utilities obtained by each principal and each agent are determined endogeneously in the market. This allows us to improve over the previous approach where the agents� utilities are exogeneously given and the principals assume all the bargaining power. We consider the simultaneous determination of the identity of the parties who meet (i.e., which agent is contracted by which principal) and the contracts they sign in an environment where each relationship is subject to moral hazard. We model the principal-agent economy as a two-sided matching game. An outcome of this economy is an endogenous matching and a set of contracts, one for each principal-agent pair under the matching. Roughly speaking, an outcome is said to be stable if there is no individual or no relevant pair objecting the existing outcome. The paper studies the set stable outcomes of this principal-agent matching market. In particular, we consider an economy with several identical principals and several agents differentiated only with respect to their initial wealth. A pair of individuals, one principal and one agent, can enter into a relationship by signing a contract. This contract specifies the contingent payments that are to be made by the agent. Also it sets the level of investment, which together with a non-verifiable effort made by the agent, determines the probability of having a high return from the project the agent operates on. The initial wealth of the agent may not cover the amount to be invested and hence, the wealth differences imply differences in liability. We begin by providing a complete characterization of the set of stable outcomes of the principal-agent economy. The first simple property we prove is that all the principals earn the same profit in a stable outcome. In particular, if the principals constitute the long side of the market, their profits are zero. The second feature is that the contracts offered in a stable outcome are Pareto efficient, i.e., it is not possible to increase the utility level of the principal without making the agent strictly worse-off. More interestingly, in a stable outcome, the matching itself is efficient, in the sense that it is the one that maximizes productive efficiency. For example, if the agents are in the long side of the market, only the wealthier ones, i.e., the more attractive ones (and all the principals) are matched. Third, the productive efficiency of a contract signed in a stable outcome increases with the wealth of a matched agent. That is, the richer the agent, closer is his contract to the first-best. The additional surplus generated due to this increase in efficiency accrues to the agents. Finally, the contracts signed in a stable outcome of this economy are more efficient than principal-agent contracts, i.e., the contracts signed when the principals assume all the bargaining power. The previous characteristics of the set of stable outcomes have very relevant policy implications when applied to particular environments. For example, consider an economy where landowners (principals) contract with tenants (agents) who are subject to limited liability. Suppose that the government would like to improve the situations of the tenants by endowing the agents with some additional money. Our analysis suggests that the government will be interested in creating wealth asymmetries among tenants since otherwise, the landowners would appropriate all the incremental surplus intended to the tenants. We establish a close relationship between the concept of stability and that of a competitive equilibrium. From the point of view of matching theory, one can see our model as a generalization of the assignment game with several buyers and sellers described by Shapley and Shubik (1972). We further consolidate stability as a reasonable solution concept for this principal-agent matching market by proposing a simple mechanism in which each of the agents proposes a contract and each principal chooses an agent. We show that the equilibrium outcomes of this mechanism coincide with the set of stable outcomes of the matching market.

37 citations


Journal ArticleDOI
TL;DR: In this article, the authors present a theory of the allocation of authority in an organization in which centralization is limited by the agent's ability to disobey the principal, and show that workers are given more authority when they are costly to replace or do not mind looking for another job, even if they have no better information than the principal.
Abstract: This paper presents a theory of the allocation of authority in an organization in which centralization is limited by the agent's ability to disobey the principal. We show that workers are given more authority when they are costly to replace or do not mind looking for another job, even if they have no better information than the principal. The allocation of authority thus depends on external market conditions as well as the information and agency problems emphasized in the literature. Evidence from a national survey of organizations shows that worker autonomy is related to separation costs as the theory predicts.

31 citations


Posted Content
TL;DR: In this paper, the Baker and Hacker/community consensus debate over the nature of rule-following in the later Wittgenstein is discussed, and it is shown that the legal argument is directed at constructing the point of law.
Abstract: I begin, in Parts I-III, by presenting the details of the Baker and Hacker/community consensus debate over the nature of rule-following in the later Wittgenstein. In Part IV this philosophical debate is related to the law through the argument that there is both an internal and an external element to rule-following in law. I here assert one of the principal claims of my position: viz., that legal argument is directed at constructing the point of law. Part V introduces the distinction between the formal and the material elements of a concept. As I shall show in detail, form is a heuristic for illuminating conceptual understanding. In Part VI, I move on to provide several examples in support of the form/matter distinction. Part VI also provides arguments in support of the proposition that understanding is internal to a practice and thus not necessarily coextensive with regularity in behavior. Parts VII-IX examine relevant claims made by Wittgenstein and their application to law. Finally, Parts X-XI sketch and illustrate my ultimate claim, a narrative approach to law.

27 citations


Journal ArticleDOI
TL;DR: The work in this paper addresses the question of how the language of contract law describes or conceptualises the market order and the relationship of the law to it, and the focus of the book is on a foundational idea, the concept of capacitas, which signifies a status conferred upon citizens for the purpose of enabling them to participate in the economic life of the polity.
Abstract: One of the principal tasks for legal research at the beginning of the 21st century is to reconstruct the understanding of the relationship between the legal system and the market order. After almost three decades of deregulation driven by a belief in the self-equilibrating properties of the market, the financial crisis of 2008 has reminded everyone of the fundamental truth that markets have legal and institutional foundations, without which they cannot effectively function. The chapters in the present volume are the result of work by a group of legal scholars which began in the mid-2000s, at a time when the shortcomings of deregulatory policies were becoming clear in a number of contexts. The chapters address the question of how the language of contract law describes or conceptualises the market order and the relationship of the law to it. The perspectives taken are, in turn, historical, comparative, and context-specific. The focus of the book is on a foundational idea, the concept of capacitas, which signifies a status conferred upon citizens for the purpose of enabling them to participate in the economic life of the polity. In modern legal systems, 'capacity' is the principal juridical mechanism by which individuals and entities are empowered to enter into legally binding agreements and, more generally, to arrange their affairs using the instruments of private law. Legal capacity is thereby the gateway to involvement in the operations of a market economy.

Posted Content
TL;DR: In this paper, the authors present an account to explain and justify the cases of fiduciary conflicts and conclude that the theory presented not only justifies how courts resolve difficult cases, but also explains the behavior of individual fiduciaries, financial firms, and regulators.
Abstract: Fiduciaries who represent multiple principals often encounter conflicts of duty, torn between promoting the interests of one principal and those of another. Courts have not done a good job of articulating principles for resolving these conflicts. They resort to inconsistent approaches and seek to elide underlying tensions in the cases. Scholars have addressed sources of fiduciary duties, and whether they constitute default contractual terms, but they have paid little attention to resolving conflicts when they arise. This Article seeks to fill the gap, presenting an account to explain and justify the cases. Fiduciaries are subject to common law duties of loyalty and care, and many difficult cases present a conflict between enforcing the duty of loyalty owed to one principal and the duty of care owed to another. The key to understanding how courts resolve such conflicts lies in the different nature of these duties. The duty of loyalty is a negative duty to avoid harm; it is a duty of omission. The duty of care is a positive duty to promote the interests of the principal, a duty to act. To explore the nature of the duties, the Article draws on Kant's discussion of perfect and imperfect duties. It explains that duties of care, like Kant's imperfect duties, can never be fully satisfied, but by enforcing the prohibitions imposed by the duty of loyalty, courts ensure that when the fiduciary acts, she acts consistently with the duty of care as well. The Article applies these principles to three types of fiduciaries: attorneys, financial firms, and company directors, explaining why courts treat a breach of the duty of care more leniently than a breach of the duty of loyalty, much like the common law has treated omissions more leniently than acts. The Article concludes that the theory presented not only justifies how courts resolve difficult cases, it also explains the behavior of individual fiduciaries, financial firms, and regulators.

Journal Article
TL;DR: Most Americans are judgment-proof as discussed by the authors, i.e., they are not required to pay damages from their own assets unless they have purchased liability insurance in adequate amounts, which is called "blood money" liability.
Abstract: "As the system currently operates, liability is, for wrongdoers ... voluntary."1I. Introduction: The Myth of Personal Tort LiabilityIn theory, tort law requires individual tortfeasors to compensate their victims for the wrongs they have negligently or intentionally inflicted. Negligent tortfeasors must pay damages from their own assets, unless they have purchased liability insurance in adequate amounts. Intentional tortfeasors do not have the option to insure because liability insurance almost always excludes intentional torts. Hence they must compensate their victims out of their personal resources.Supposedly, this system serves the twin objectives of deterring wrongdoing and doing justice. The threat of personal tort liability-or, at a minimum, of increased liability insurance premiums-induces potential tortfeasors to be more careful. When an accident does occur, corrective justice is accomplished by shifting the loss from the victim to the wrongdoer. And if the tortfeasor has liability insurance, the welfare loss is spread across the pool of liability insureds, rather than concentrated on the victim.Explicitly or implicitly, this account of how the tort system regulates the behavior of individuals is standard fare in torts scholarship and torts courses.2 The truth is dramatically different. Most people in our society face little or no threat of personal liability for any intentional or unintentional torts they might commit. Many tort claims are not large enough to be worth litigating in the first place. But even when it comes to larger, litigable claims, many Americans are "judgment-proof: They lack sufficient assets (or sufficient collectible assets) to pay the judgment in full (or even in substantial part).3Knowing that they can collect at best a fraction of the plaintiff s claim even if they litigate and win, plaintiffs' attorneys typically decline to litigate meritorious tort claims against uninsured or underinsured individuals. In the absence of liability insurance, plaintiffs are effectively barred from bringing suit unless the tortfeasor is an asset-rich corporation or an affluent individual who neglects to take elementary precautions to protect his or her assets from tort liability.4 And precisely because it is so easy to achieve judgment-proof status, individuals frequently fail to purchase adequate-or any-liability insurance.5Perhaps this description seems unremarkable. After all, everyone knows that plaintiffs' lawyers prefer to sue "deep pockets" such as liability insurers and big companies, and, at the other extreme, that it is pointless to sue persons living at the subsistence level. True, but what is not generally understood is that most Americans would have much deeper pockets were it not for a multitude of legal rules that shelter the lion's share of their income and assets from collection by tort plaintiffs (and other creditors). Most Americans are judgment-proof not because we are poor, but because state and federal laws entitle us to be judgment-proof. The paradoxical result is that contemporary America, one of the most affluent societies in human history, is simultaneously-and largely by operation of law-a judgment-proof society.This Article is about how our laws have made being judgment-proof the rule rather than the exception; about what this implies for the standard deterrence, corrective justice, and loss-spreading accounts of tort law; and about whether anything should be done to lower the legal barriers to enforcing and collecting tort judgments from individual tortfeasors. The Article proceeds as follows: Part Ð offers a preliminary overview of the judgment-proof problem, and of the principal legal barriers to collecting the personal income and wealth of American tortfeasors. The thrust of the argument is that these barriers greatly reduce the threat of personal tort liability-what tort lawyers call "blood money" liability6-for individuals across the spectrum of income and wealth. …

Journal Article
TL;DR: In this paper, the authors study a data set of 412 merger and acquisition contracts contained as exhibits in SEC Form 8-K filings by reporting corporations over a seven month period in 2002 and find that although these contracts frequently select Delaware law and forum, there is a relative "flight" from Delaware in the contractual setting.
Abstract: Legal scholars have focused much attention on the incorporation puzzle-why business corporations so heavily favor Delaware as the site of incorporation. This paper suggests that the focus on the incorporation decision overlooks a broader but intimately related set of questions. The choice of Delaware as a situs of incorporation is, effectively, a choice of law decision. A company electing to charter in Delaware selects Delaware law (and authorizes Delaware courts to adjudicate legal disputes) regarding the allocation of governance authority within the firm. In this sense, the incorporation decision is fundamentally similar to any setting in which a company selects a law and authorizes (or selects) a forum in which disputes are to be resolved. We study a data set of 412 merger and acquisition contracts contained as exhibits in SEC Form 8-K filings by reporting corporations over a seven month period in 2002 in order to assess the decisions the parties have made regarding choice of law and choice of forum. We find that, although these contracts frequently select Delaware law and forum, there is a relative "flight" from Delaware in the contractual setting. Delaware corporations tend to choose Delaware law less than other corporations choose the law of their states of incorporation. Furthermore, in those contracts specifying Delaware law, many firms do not specify Delaware as the litigation forum. Corporations that choose Delaware law tend to choose Delaware as a litigation forum less than corporations that choose other states' laws tend to choose such states as a litigation forum. Delaware was the place of incorporation for 189 merger contracts; it was the choice of law for 132. With respect to forum selection, 115 contracts that designated a forum had Delaware corporate acquirers. Yet only sixty-four contracts specified Delaware as the litigation forum. In contrast, for example, New York had eight corporate acquirers and forty-five contracts specifying that New York law governed. We investigate the determinants underlying these decisions about choice of law and forum selection. Regression results confirm the flight from Delaware law and forum, conditional on Delaware being the acquiring firm's place of incorporation. I. INTRODUCTION A leading question in American corporate law is why such a large percentage of large firms choose Delaware as their state of incorporation. An early view saw Delaware as leading a "race to the bottom" by providing charter terms that favored corporate managers at the expense of shareholders and the public at large.1 Later theorists postulated that Delaware might rather be providing terms that benefited all parties to the corporate contract ex ante-the "race to the top" view.2 Some have suggested that Delaware incorporation may represent neither a race to the top nor to the bottom, but rather a race to somewhere in the middle, because the interests of corporate managers and other influential parties align only partially with the interests of the public.3 More recently, the notion of beneficial competition among the states for corporate charters has been challenged on the grounds either that state competition may not produce value-increasing rules;4 that Delaware's dominance is so great that effective competition does not exist,5 at least with any state other than the firm's principal place of business;6 or that the most salient competition is not between states but rather between states and the federal government.7 Others have examined the role of attorneys in the process, arguing that the self-interest of transactional attorneys influences the selection of Delaware as a chartering state,8 as well as the nature of the contractual clauses that are included in the charters.9 Studies also have used empirical methods to investigate the advantages of Delaware incorporation, with some finding advantages to incorporating in Delaware10 and others casting doubt on the robustness of these results. …

Journal ArticleDOI
TL;DR: In the last quarter-century, the Supreme Court has legitimated the executive's power of interpretation, above all in Chevron v. Natural Resources Defense Council, the most cited case in modern public law as mentioned in this paper.
Abstract: Under Marbury v. Madison, it is “emphatically the province and duty of the judicial department to say what the law is.” But as a matter of actual practice, judgments about “what the law is” are often made by the executive department, not the judiciary. In the last quarter-century, the Supreme Court has legitimated the executive’s power of interpretation, above all in Chevron v. Natural Resources Defense Council, the mostcited case in modern public law. Chevron reflects a salutary appreciation of the fact that the executive, with its comparative expertise and accountability, is in the best position to make the judgments of policy and principle on which resolution of statutory ambiguities often depends. But the theory that underlies Chevron remains poorly understood, and in the last two decades, significant efforts have been made to limit the executive’s interpretive authority. In general, these efforts should be resisted. The principal qualification involves certain sensitive issues, most importantly those involving constitutional rights. When such matters are involved, Congress should be required to speak unambiguously; executive interpretation of statutory ambiguities is not sufficient.

Journal ArticleDOI
TL;DR: A principal objective of planning that is regularly presented is the reconciliation of the individual interest with the common good, albeit that the commongood is difficult to define and measure as discussed by the authors...
Abstract: A principal objective of planning that is regularly presented is the reconciliation of the individual interest with the common good, albeit that the common good is difficult to define and measure. ...

Journal ArticleDOI
TL;DR: In this paper, an explanation for why a principal may demand too much paperwork from a subordinate is presented. But, the principal disregards the agent's cost increase of more internal paperwork, and the requested amount of internal paperwork may be too high from both the agents' personal point of view and the organization as a whole.
Abstract: This paper offers an explanation for why a principal may demand too much paperwork from a subordinate: due to limited liability and moral hazard a principal is unable to appropriate all rents. Internal paperwork allows a more accurate monitoring of the agent and enables the principal to appropriate a larger part of the agent’s rent. In her decision the principal disregards the agent’s cost increase of more internal paperwork. Consequently, the requested amount of internal paperwork may be too high from both the agent’s personal point of view and the organization as a whole.

Journal ArticleDOI
TL;DR: The ascendance of classical legal thought is usually associated with Christopher C. Langdell's tenure as dean of Harvard's law school as mentioned in this paper, which shifted legal training away from apprenticeship and moving it to a university setting where students were trained as legal scholars.
Abstract: The nineteenth century was the age of legal science. Across the globe, numerous cultures began to think of their law in terms of an interlocking system of internally coherent rules. While the details differ, these movements shared the belief that numerous legal propositions were held together by a small number of core legal concepts, and that correct decisions could be determined via formal methods of legal deduction and analysis. This mode of legal thought gave increased importance to legal concepts and analytic categories. Duncan Kennedy has termed this mode of legal analysis Classical Legal Thought.This restructuring of legal analysis brought about changes in the understanding of what the law is and how it should be studied. In its American variant, the ascendance of Classical Legal Thought is usually associated with Christopher C. Langdell's tenure as dean of Harvard's law school. Langdell created the modern law school by shifting legal training away from apprenticeship and moving it to a university setting where students were trained as legal scholars. Underlying the Langdellian moment is the assumption that law is comprised of analytic concepts which can be apolitically applied through a series of deductions made from the core legal principal.

Journal ArticleDOI
TL;DR: In this paper, the authors offer some thoughts on the relationship between the rule of law, considered as a moral ideal, and the notion of rules as the principal means by which legal order is manifested.
Abstract: The modem lawyer operates within a conception of law as a body of rules To confront the law of contract, of torts, or of property, is to familiarize oneself with an intricate set of rules Such familiarity is not yet legal scholarship, much less legal practice For in order to use the rules as lawyers use them, the rules must be contemplated and considered, and the relationship between the different rules must be understood Because the intellectual processes involved in handling the rules exhibit a high degree of sophistication, those intellectual processes may themselves become the subject matter of philosophical argument Thus we may regard jurisprudential theories as embodying differing understandings of the processes of handling legal rules; and we may conceive of legal theory as the attempt to grasp the moral significance of rules as a foundation for social order This essay shall offer some thoughts on the relationship between the rule of law, considered as a moral ideal, and the notion of rules as the principal means by which legal order is manifested 1 Positivism, Idealism and Common Law When juristic thinking emerged from the early modern age and entered the 18th century, the notion of rule through law came increasingly to be associated with the idea of government through rules Yet the same intellectual conditions which had brought about the evolution (in Hume's words) from a government of will to a government of law, also encouraged an interpretation of those developments along lines which were fundamentally alien to the legal conceptions and practices from which those ideas had emerged Two traditions of thought would come to dominate speculative debate about the nature of law as a social institution: moral idealism, which continued to locate the foundations of law's authority in the system of natural rights; and an empirically-minded version of liberalism, which would ultimately develop into an austere form of legal positivism, and which would emphasize law as an instrument of deliberate social engineering The effect of this debate was to change fundamental features of common law scholarship, both through the development of doctrinal legal science and, at the same time, through a changing conception of juristic speculation as a body of questions about doctrinal science It is idealism, rather than positivism, which might be thought of as more closely describing the forms of reasoning and scholarship which embody traditional * Reader in Jurisprudence, University College London Email: scoyle@uclacuk ? The Author 2006 Published by Oxford University Press All rights reserved For permissions, please e-mail: journalspermissions@oxfordjournalsorg This content downloaded from 1575539209 on Sat, 14 May 2016 06:21:20 UTC All use subject to http://aboutjstororg/terms 258 Oxford Journal of Legal Studies VOL 26 common law practice For idealism, with its emphasis on moral values and rights, seems to offer the best explanation of the characteristic fluidity of common law 'rules' Yet insofar as the emergence of doctrinal legal science constituted a genuinely new way of thinking about the law, developments in speculative jurisprudence had rather less impact on the ordinary business of judicial argument and procedure which made up the bulk of the lawyer's intellectual engagement with the law than did the upsurge in parliamentary intervention into traditional common law areas, or the development of ideas concerning freedom of contract A form of common law scholarship therefore continued to survive, which differs in essential respects from both positivism and idealism: a form of scholarship for which precedent and custom, rather than rights or rules, supplies the ground of authority and justification Positivism and idealism can be regarded as attempts to theorize and regiment these traditional conceptions in ways which made them intelligible and justifiable to contemporary audiences whose understandings of social life rendered doubtful the idea that rule through law can be achieved on the basis of customs and shared practices Both positivism and idealism, in different ways, describe a legal order constituted by a body of rules For the positivist, political stability and social order represent a political achievement attainable only through articulated legal rules: in a world characterized by apparently unbridgeable diversity between individual conceptions of moral worth and political value, customary practices provide a doubtful focus for collective interpretations, and a system of deliberately created, authoritative rules comes to be seen as the unique means of bringing about harmony and certainty in the interpersonal relationships on which social order

Journal ArticleDOI
TL;DR: In this article, the authors examined the legal implications of delegation as one of the school principal's managerial tasks and concluded that due consideration should be given to certain legal principles, such as the delegatus delegare non-potest rule prescribing that a delegate cannot delegate his authority and the ultra-vires doctrine restricting the exceeding of powers given.
Abstract: In today's litigious society, every management action of the school principal is potentially loaded with legal implications. It is therefore important for the school principal to have a clear understanding of legal principles that equally apply to education management. Invariably, one would not expect a principal to consult a lawyer every time a professional decision needs to be taken. This research has examined the legal implications of delegation as one of the school principal's managerial tasks. It proceeds from the premise that the school principal possesses statutory delegated authority and common law discretionary powers of delegation. It is therefore crucial that in exercising such powers, due consideration should be given to certain legal principles, such as: the delegatus delegare non potest rule prescribing that “a delegate cannot delegate his authority” and the ultra-vires doctrine , restricting the exceeding of powers given. An empirical investigation was undertaken with reference to the legal...

01 Jan 2006
TL;DR: In the 1990s, the United Nations Standard Rules for Non-Custodial Measures 1 (the so-called Tokyo Rules) were adopted, the principal goal of which was to reduce the traditional reliance on imprisonment as a legal punishment as mentioned in this paper.
Abstract: How might a legislature reduce the use of custody as a sanction? Constraining rising – or reducing stable – prison populations remains a challenge confronting most western nations. It is now fully twenty years since the United Nations Standard Rules for Non-Custodial Measures 1 (the so-called “Tokyo Rules”) were adopted, the principal goal of which was to reduce the traditional reliance on imprisonment as a legal punishment. Throughout the 1990s, however, prison populations rose in many common law jurisdictions, particularly England and Wales and the United States. 2

Journal ArticleDOI
TL;DR: The German version of a limited liability regime cuts across these distinctions by including the protective function in the normative scope of corporate law, thereby downgrading the law of fraudulent transfers.
Abstract: Legal regimes of limited liability serve different functions governed by distinct normative principles. The enabling function of limited liability aims at facilitating investment in risky activities and at organising principal/agent-relationships within the firm. In this area, choice of law may readily be allowed. At the other end of the spectrum, the protective function of limited liability regimes serves the objective of protecting outsiders from externalisation of risk. In this area, choice of law is much more problematic. Fraudulent transfer law belongs in the latter group, whereas corporate law belongs in the former. However, the German version of a limited liability regime cuts across these distinctions by including the protective function in the normative scope of corporate law, thereby downgrading the law of fraudulent transfers. As will be become apparent, this structural feature explains most of the differences that emerge when comparing the German law of fraudulent transfers with its American counterpart. The recent case law of the ECJ poses a major challenge to the traditional approach. It seems that the best way to deal with the challenge is for German law to develop towards the American model.

Dissertation
01 Jan 2006
TL;DR: In this paper, it is argued that in the context of environmental protection the most acceptable aspect of retribution is just deserts, especially the notion of proportionality, with regard to utilitarianism, deterrence, prevention and reinforcement may in various degrees be regarded as legitimate purposes of the criminal sanction in environmental law.
Abstract: The magnitude of environmental degradation in Malawi suggests that environmental law has not been effective. While inadequate enforcement of the law is certainly a significant cause of ineffectiveness, it is demonstrated that the other cause is the current normative state of the law. Malawi uses three traditional legal tools for achieving environmental protection: the criminal sanction, administrative measures and civil measures. An examination of the current environmental laws reveals that the criminal sanction is the primary tool prescribed in Malawian environmental circles. From a stage when the criminal sanction was used to reconcile the parties to a dispute and to discipline the recalcitrant party, the criminal sanction has evolved to the current stage when its purposes are retributive and utilitarian. It is contended that in the context of environmental protection the most acceptable aspect of retribution is just deserts, especially the notion of proportionality. With regard to utilitarianism, deterrence, prevention and reinforcement may in various degrees be regarded as legitimate purposes of the criminal sanction in environmental law. In the current stage of the criminal sanction its operation is affected greatly by the Bill of Rights in Malawi's Constitution. It is suggested that in dealing with various aspects of the criminal sanction vis-a-vis the Constitution, Malawian courts should lean towards saving them from unconstitutionality in the interest of environmental protection. An analysis of Malawi's environmental statutes shows that some of the criminal offences have not been articulated clearly and others conflict with constitutional provisions in a non-defensible way. The criminal sanction is also shown to have weaknesses. When these weaknesses are weighed against the criminal sanction's strengths, it is clear that the criminal sanction has more weaknesses than strengths. This scenario has led many scholars to conclude that criminal sanctions are not appropriate for crimes of all sorts. They suggest that criminal sanctions should be reserved for serious offences and that

Journal Article
TL;DR: In this paper, the authors examine the legal and ethical issues involving the protection and misappropriation of trade secrets within the business environment and present a pedagogical case study to examine these issues.
Abstract: Almost every business owns proprietary information that adds value and provides a competitive advantage because the information is not known to the business's competitors. Trade secret law protects such information from theft or unauthorized disclosure. Because one of the principal policies underlying trade secret law is the maintenance of standards of commercial ethics, trade secrets are a rich source of material for exploring questions of business ethics alongside the law. This pedagogical case study offers a means to examine the legal and ethical issues involving the protection and misappropriation of trade secrets within the business environment.

Journal ArticleDOI
TL;DR: The Social Organization of Law: Introductory Readings by Austin Sarat as discussed by the authors is a collection of introductory readings on law and society with a focus on race, class, and gender.
Abstract: Still, at the Margins Austin Sarat, ed., The Social Organization of Law: Introductory Readings. Los Angeles: Roxbury Publishing Co., 2004. 596 pp. $65.95 paper. In one of many traditions of critical race scholarship, this review opens with a first-person narrative. When I was asked to review Austin Sarat's new compilation of introductory readings on law and society at the "Change" breakfast of the 2004 annual Law and Society Association meeting in Chicago, I responded affirmatively but with rather tepid enthusiasm, which reflected-as I recall-the level of enthusiasm I felt for the conference overall, despite (or perhaps because of) it being my third year in attendance at the notoriously large and panel-packed meeting. When I was asked further to review the compilation specifically from a "critical race perspective," my lack of enthusiasm quickly transformed to discomfort, and I wanted to immediately revoke my acceptance of the offer to do the review. Even those who do not identify as "race crits" or "fern race crits"-as I do-are likely aware that law and society is known in certain academic circles for being overwhelmingly liberal (and, therefore, not critical) and overwhelmingly white. Moreover, although certainly many race crits do consider themselves part of this large, scholarly community and while I always enjoyed participating in and attending various panels, up to that point I had never sought to make law and society my intellectual "home." As a result, in being asked to review Sarat's new book, I felt both flattered and doomed-flattered because I was being called upon for my "expertise" as a race crit who could write intelligently about the book, and doomed because I was an outsider being invited in, however briefly, to criticize a principal player-an insider's insider-in the law and society movement. It was a classic micro-dilemma of "subject unrest" (Gulp et al. 2003:2435)-I wanted in and wanted out at the same time, for all the right and wrong reasons. In the moments when I contemplated changing my mind, my tendency toward melodrama gave way to my inability to say no and, more seriously, to my feeling that someone should write a critical race review of the book. But my feelings of ambivalence toward this review, even as I write it, have not diminished, and I am all too aware of my positionality as an outsider to the law and society community. This disclosure of outsider positionality is an important one because it frames the substantive critique of this review. Mission and Audience The Social Organization of Law is aimed at students, both at undergraduate students who are interested in becoming lawyers or in the legal system more generally, and at law students interested in the interconnectedness of law and society. In his introduction, Sarat sets forth the text's basic premise, that "law seeks to work in the world" (p. 1), and he describes the two ways in which the collection aims to explain how law does so: First, the readings in this book highlight law's responsiveness to various dimensions of social stratification. They draw attention to the question of when, why, and how legal decisions respond to social characteristics (e.g., race, class, gender) of those making the decisions as well as those who are subject to them and when, why, and how they should do so. ... Second, the book treats law itself as a social organization, emphasizing the complex relations among its various component parts (e.g., judges and jurors, police and prosecutors, appellate and trial courts). . . . (p. 1). Sarat thematically organizes his anthology around the law's paradoxes. That is, the law works to be "impartial and evenhanded" but also "sympathetic and responsive"; accessible and efficient but not overly so; deterrent of socially unacceptable behaviors but also equitable toward the perpetrators of such conduct; and, most significantly, controlling of violence and also of the sort of discretion thought necessary to control that violence (p. …

Journal ArticleDOI
TL;DR: The authors summarize the many thoughtful papers presented at this conference and offer their own observations on several of the conference's principal themes, which is a difficult task for an outside observer of European law reform.
Abstract: Summarizing the many thoughtful papers presented at this conference is a difficult task for an outside observer of European law reform. In lieu of bad comments on good papers, I offer instead my own observations on several of the conference's principal themes.

Journal ArticleDOI
Ben Kusmin1
TL;DR: Advances in medical technology over the past several decades have made it possible to increase life long past the point where many patients would otherwise suffer a natural death, and the number of people treated with life support technology will rise accordingly.
Abstract: I. INTRODUCTION Advances in medical technology over the past several decades have made it possible to increase life long past the point where many patients would otherwise suffer a natural death. ' In the past, the most common causes of death were abrupt killers such as tuberculosis, pneumonia, and injuries.2 Now the average American can expect to spend the final two years of life too disabled to perform even the routine activities of life unassisted.3 Thousands of people also languish in irreversible comas or persistent vegetative states due to illness or injury.4 Meanwhile, the ranks of the elderly can be expected to burgeon as Baby Boomers approach retirement age5 and the number of people treated with life support technology (alternatively described as "life-preserving" and "death-prolonging") will rise accordingly. The conventional wisdom is that most people would like to avoid such treatment, preferring to die with dignity. Advance directives ostensibly enable people to avoid this fate, by expressing their treatment decisions in advance (a "living will"), or by designating someone they trust to make treatment decisions for them (a "durable power of attorney for health care"). Relatively few people, however, have executed advance directives.6 The living wills that are executed often contain ambiguous or contradictory instructions, reflecting a lack of comprehension of the medical issues and treatment possibilities involved.7 Moreover, medical decision-makers are often unaware of the existence of a patient's living will because they were not involved in the creation of the directives.8 Many of these problems can be attributed, at least in part, to the complex execution requirements required by state statutes for the execution of a valid advance directive. By imposing unnecessarily burdensome requirements on the process, state legislatures have removed the execution of advance directives from the purview of doctors and families, and shifted it to the legal profession. This shift has impacted the number, quality, and usability of these important planning tools. The most pernicious technicality in the advance directive execution process is the common requirement of so-called "disinterested witnesses." A fairly representative statute states the requirement as follows: A health care directive must be signed by the principal and that signature must be verified by a notary public or at least two or more subscribing witnesses who are at least eighteen years of age. ... At least one witness to the execution of the document must not be a health care or long-term care provider providing direct care to the principal or an employee of a health care or long-term care provider providing direct care to the principal on the date of execution. The notary public or any witness may not be, at the time of execution, the agent, the principal's spouse or heir, a person related to the principal by blood, marriage, or adoption, a person entitled to any part of the estate of the principal upon the death of the principal under a will or deed in existence or by operation of law, any other person who has, at the time of execution, any claims against the estate of the principal, a person directly financially responsible for the principal's medical care, or the attending physician of the principal.9 This particular law states, in substance, that an advance directive must either be notarized or signed by two witnesses, at least one of which may not be the patient's health care provider or one of its employees, and neither of which is the patient's attending physician, or his spouse, relative, heir, agent, or creditor, or the one responsible for the medical bills. The laws of thirty-nine states and the District of Columbia require witnesses for advance directives, and prohibit certain parties from serving in that role. Together they represent a dizzying array of permutations of those considered unfit to witness the execution of advance directives. …

Book ChapterDOI
01 Jan 2006
TL;DR: Chen et al. as mentioned in this paper presented a model of the criminal justice system in the UK, based on a multi-agent approach to the construction of a model for assessing the impact across the whole justice system of a variety of policies.
Abstract: This chapter reports on a multi-agent approach to the construction of a model of the English criminal justice system. The approach is an integration of model-building with ways of enabling people to engage in strategic policy making and take into account the complex interactions of the criminal justice system. From the workings of the police to court procedures to prisons, decisions in one area of the criminal justice system can be crucial in determining what happens in another area. The purpose was to allow assessment of the impact across the whole justice system of a variety of policies. IDEA GROUP PUBLISHING This chapter appears in the book, Computational Economics: A Perspective from Computational Intelligence edited by Shu-Heng Chen, Lakhmi Jain & Chung-Ching Tai © 2006, Idea Group Inc. 701 E. Chocolate Avenue, Suite 200, Hershey PA 17033-1240, USA Tel: 717/533-8845; Fax 717/533-8661; URL-http://www.idea-group.com ITB11870 An Application of Multi-Agent Simulation to Policy Appraisal 229 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. INTRODUCTION This chapter reports on a multi-agent approach to the construction of a model of how the criminal justice system in England operates. The model’s principal purpose is to allow the impact of policy variants across the whole justice system to be assessed. Because the model is designed to help people to think about what happens when things are changed in a deliberative manner, we provide some examples of policy changes for which the model is designed to help. We also discuss a visualization that is representative of what the model can do for different policy views. In the next section, we describe the structure of criminal justice in England. Section 3 discusses the purpose of the project, which goes beyond the mere construction of a model. In producing the model there were at least two aspects of interest: the way in which the problem was approached, and the physical representation of a solution which we call a “model”. These are discussed in Sections 4 and 5. THE CONTEXT The criminal justice system in England is delivered by diverse government bodies— as is true in many other countries. In England these are not part of a single government department. There are three departments involved: the Home Office which is by far the biggest financially and in terms of human resource; the Department of Constitutional Affairs; and the Crown Prosecution Service. Each of these has its own government minister, and in the case of the first two, has a range of responsibilities outside of those that we consider in constructing a model of the criminal justice system. Thus the Home Office is also responsible for immigration and for homeland security, whereas the Department of Constitutional Affairs also has responsibility for civil and family law. The Home Office’s criminal justice responsibilities include the Police Service, the Prison Service and the Probation Service. But this is not a direct operational responsibility. Other agencies are responsible for the delivery of each service. there is little direct financial accountability (although all rely on central government funds) and only limited operational interference. Top-level targets are set for each service but how useful these are is uncertain. Operational control is divided across 42 areas of the country. Determining how things are run is a local matter. The Department of Constitutional Affairs is responsible both for the courts and, via an executive agency, for the provision of free criminal defence services (known as Legal Aid). The courts are divided between lower and higher courts: The former are called magistrates’ courts and deal with lesser offences; the latter are called the Crown Court and generally deal with more serious cases. The Crown Prosecution Service is responsible for prosecuting criminal cases. It is the least complex of the three bodies. How the criminal justice system functions depends crucially on the way in which each of these bodies delivers services, and on the interactions between what happens in one, and what happens in another, as well as within each agency. Within each part of the system, there are thousands of individual agents who act according to sets of rules some of which are fairly proscriptive, and others which are rules of thumb, often undescribed. 5 more pages are available in the full version of this document, which may be purchased using the "Add to Cart" button on the publisher's webpage: www.igi-global.com/chapter/application-multi-agentsimulation-policy/6789

Journal ArticleDOI
TL;DR: In this article, the authors deal with the problem of labour law effectiveness, i.e., the comparison between the protective rules' reasons for existence and their practical effects, and propose a crucial test for the equalization principle's practical functioning.
Abstract: Purpose – The purpose of this paper is to deal with the problem of labour law effectiveness, i.e. the comparison between the protective rules’ reasons for existence and their practical effects.Design/methodology/approach – The paper briefly reviews the most important economic models from which arguments can be drawn in support of (or against) the coherence between labour law aims and effects, particularly focusing on the principal/agent model, which considers the work contract as partially functioning as a sort of insurance policy aimed to guarantee a certain degree of equality among workers notwithstanding their different ability and luck. The paper then assumes the traditional labour law commitment to building equality among workers as a test‐bench of the labour law effectiveness. It then proposes a crucial test for the equalization principle's practical functioning: when is it fair to dismiss an inefficient worker? The paper analyses the current mechanism of judicial application of just cause for dismi...

Journal ArticleDOI
TL;DR: In this paper, the authors model the shareholders-manager relationship as a principal-agent game in which the agent (the manager) alone observes the economic outcome, and show that the limited liability of the agent, defined as the agent's feasible minimum payment, might explain the demand for earnings management by the principal.
Abstract: Consider the following puzzle: If earnings management is harmful to shareholders, whydon't they design contracts that induce managers to reveal the truth? To answer this question, we model the shareholders-manager relationship as a principal-agent game in which the agent (the manager) alone observes the economic outcome. We show that the limited liability of the agent, defined as the agent's feasible minimum payment, might explain the demand for earnings management by the principal. Specifically, when the limited-liability level is high (low), a contract that induces earnings management may be less (more) costly than a truth revealingcontract. This finding offers a new explanation of the demand for earningsmanagement.