Principal (commercial law)

About: Principal (commercial law) is a research topic. Over the lifetime, 1579 publications have been published within this topic receiving 35379 citations. The topic is also known as: Principal (commercial law).

Stories of War and Peace On Writing the History of International Law in the 'Third Reich' and After

Abstract: This essay presents some reflections on what today is widely regarded as the standard book on the history of international law, and on its author, Wilhelm G. Grewe, who after 1945 was one of the architects of West Germany's international legal status and of its relations with the three Western Allied Powers. In particular, the essay discusses Grewe's principal and most influential idea, an interpretation of the history of modern international law as a sequence of epochs defined in each case by the then-dominant power in the states' system. Since Grewe developed and formulated this idea in the context of National Socialist political and legal thought, and particularly under the influence of Carl Schmitt's work, the essay leads back to the time of the Second World War and the ideological struggles of that time. In that respect, it is a study of the performance of international legal scholars under the conditions of a dictatorship, and of the intellectual legacy of the "Third Reich" in international law. Thus, in different ways the essay explores the larger questions of the origins, validity and future of the idea of a power-based international legal order.

Decision Processes, Agency Problems, and Information: An Economic Analysis of Capital Budgeting Procedures

Abstract: Corporations use a variety of processes to allocate capital. This article studies the benefits and costs of several common budget procedures from the perspective of a model with agency and information problems. Processes that delegate aspects of the decision to the agent result in too many projects being approved, while processes in which the principal retains the right to reject projects cause the agent to strategically distort his information about project quality. We show how the choice of a decision process depends on these two costs, and specifically on severity of the agency problem, quality of information, and project risk.

The Judgment-Proof Society

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. …

Ex Ante Choices of Law and Forum: An Empirical Analysis of Corporate Merger Agreements

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. …