Consider a contract over trade in continuous time between two players, according to which one player makes a payment to the other in exchange for an exogenous service. At each point in time, either player may unilaterally require an adjustment to the contract payment, involving adjustment costs for both players. Players' payoffs from trade under the contract, as well as from trade under an adjusted contract, are exogenous and stochastic. We consider players' choice of whether and when to adjust the contract payment. It is argued that the optimal strategy for each player is to adjust the contract whenever the contract payment relative to the outcome of an adjustment passes a certain threshold, depending among other things on the adjustment costs. There is strategic substitutability in the choice of thresholds, so that if one player becomes more aggressive by choosing a threshold closer to unity, the other player becomes more passive. If players may invest in order to reduce the adjustment costs, there will be over-investment compared to the welfare-maximizing levels.
The application of the doctrine of piercing the corporate veil to contract disputes has been attacked as undesirable. This article shows that applying piercing to contracts is desirable. Contract-centered veil-piercing functions akin to a penalty-default clause that encourages the efficient production of information, avoids wasteful precaution, and promotes the use of the corporate form for entrepreneurship.
This paper considers the concept of the "author" and its role in defining the nature of a text in light of Michel Foucault's essay "What is an Author?" Taking up his suggestion that the fictional, constructed author of literature functions to limit the possibilities of meaning of a text, the paper explores how it might apply to the genre of contracts. While Foucault explicitly identifies contracts as authorless texts, this paper aims to identify other generic manifestations of the "author function" that attempt to stabilize meaning in contracts' written forms. Specifically, this paper examines prevalent boilerplate provisions and conventions of drafting and construction that have emerged in written contracts in the absence of an author. In doing so, the paper considers the relationship between the agreement and the written contract in contract law and interpretation, with an eye to the importance of delimiting the meaning of language in the law, and in the texts of contracts, in particular, as ostensible manifestations of consensus. By examining the contemporary form of the written contract in terms of boilerplate and other drafting conventions that often inscribe fictions of stability or limitation of meaning into the contractual text, the paper seeks to further an understanding of the written contract as a genre in which the author function or an analogous limiting principle manifests itself without reference to the individual. Such an analysis seeks to shed light not only on the nature and function of the written contract but on the nature of the discourse of the law more generally and the ways in which it defines itself in contrast to that of literature.
Smart play-out is a powerful technique for executing live sequence charts (LSCs). It uses verification techniques to help run a program, rather than to prove properties thereof. We extend smart play-out to cover a larger set of the LSC language features and to deal more efficiently with larger models. The extensions cover two key features of the rich version of LSCs, namely, time and forbidden elements. The former is crucial for systems with time constraints and/or time-driven behavior, and the latter allows specifying invariants and contracts on behavior. Forbidden elements can also help reduce the state space considered, thus enabling smart play-out to handle larger models.
Abstract Smart pointers denote a wellâknown technique for collective resource ownership, e.g. sharing dynamic object instances, while usually supporting automatic garbage collection based on reference counting. The original method has been retargeted to serve as a generic defensive programming method for âexhaustive trackingâ of erroneous pointer use in C++. Automatic bug tracking is supported in a unified manner both for pointers to heap memory, i.e. free storage, as well as for pointers to stack or global memory, i.e. auto or static storage. Overall, the presented technique (a) offers a simple contract for memory allocation and use; (b) supports type and indirection depth genericity; (c) implements most operators supported for builtâin pointers with embedded bug defense; (d) offers an alternative way of employing a garbage collection facility for memory leak detection; and (e) provides an appropriate collection of utility macros, through which defensive pointers should be used, with an alternative version reâtargeted to normal native pointers. Copyright Š 2004 John Wiley & Sons, Ltd.
The article explores the classic consumer-merchant dichotomy from the vantage of small businesses. Using empirical data and the psychology, economics, and management literature, it shows that small businesses, treated like large businesses throughout most of contract and commercial law, in fact behave more like consumers. Small businesses lack the financial strength of large businesses. They generally lack the information gathering ability of large businesses. Finally, they generally are more prey to cognitive errors than are large businesses. As a result, small businesses lose in two ways. When they deal with consumers, they are presumed to have the power, information, and cognitive capacity of large firms. The law thus obliges them to grant protections based on asymmetries that may not exist. When they deal with large businesses, the law treats them as essentially equal, even though small businesses may suffer from the same disadvantages that require legal intervention for consumers. The article considers the ways in which the law can deal with this false dichotomy and suggests some solutions, particularly in the way the law treats risk allocation.
The present paper aims to contribute to the literature on the foundations of incomplete contracts by providing conditions under which simple delegation of authority is the solution to the complete-contracting problem of the parties. We consider a hold-up framework where both parties profit from an investment that raises the value of an asset. Delegation turns out to be optimal if (i) the decision-dependent parts of the payoffs of the parties are linear in the asset value, and (ii) decisions have no investment-independent effect. If overinvestment might be an issue, delegation, however, with restricted competencies is optimal if some additional continuity requirements are met.
We present a model in which a sovereign country optimally decides on its consumption and investment policies as well as on the optimal time to default. In the paper we allow the sovereign borrower to keep the fraction of its augmented wealth in so-called international reserves. We further assume that these reserves can be deposited at the risk-free rate. In this framework, we obtain analytical solutions for optimal consumption and investment rules, as well as formulas for optimal default boundary and the value of the risky loan. In the paper we assume that in the case of default the lender can impose economic and political sanctions against the borrower and also can seize an implicit collateral. We show that when the country is getting very close to its default wealth level, then its relative risk aversion decreases and the country increases its consumption rate and the risky investment fraction at the expense of available liquid reserves.
Deanne A. Crone, Robert H. Horner, Leanne S. Hawken
1. Introduction to the Behavior Education Program 2. The Context for Positive Behavior Support in Schools 3. The Basic BEP: Critical Features and Processes 4. Getting a BEP Intervention Started 5. Roles, Responsibilities, and Training Needs Related to Implementing the BEP, Deanne A. Crone, Leanne S. Hawken, and K. Sandra MacLeod 6. Designing the BEP to Fit Your School 7. Measuring Response to the BEP Intervention and Fading 8. The Modified BEP: Adaptations and Elaborations 9. High School Implementation of the BEP, Jessica Swain-Bradway and Robert H. Horner 10. Adapting the BEP for Preschool Settings, Susan S. Johnston and Leanne S. Hawken 11. Cultural Considerations and Adaptations for the BEP, Joan Schumann and Jason J. Burrow-Sanchez 12. Frequently Asked Questions and Troubleshooting the BEP Implementation Appendices: Appendix A.1. List of Acronyms and Definitions Appendix B.1. Working Smarter Not Harder Organizer Appendix B.2. Request for Assistance Form Appendix B.3. Parental Permission Form Appendix B.4. Daily Progress Report-Middle School, Example 1 Appendix B.5. Daily Progress Report-Middle School, Example 2 Appendix B.6. Thumbs Up! Ticket Appendix B.7. Daily Progress Report-Elementary School, Example 1 Appendix B.8. Daily Progress Report-Elementary School, Example 2 Appendix C.1. BEP Implementation Readiness Questionnaire Appendix C.2. Voting Form for Implementing the BEP Intervention Appendix C.3. BEP Development and Implementation Guide Appendix D.1. BEP Check-In, Check-Out Form-Elementary School Appendix D.2. BEP Check-In, Check-Out Form-Middle/High School Appendix E.1. Reinforcer Checklist Appendix F.1. BEP Fidelity of Implementation Measure (BEP-FIM) Appendix F.2. BEP Acceptability Questionnaire-Teacher Version Appendix F.3. BEP Acceptability Questionnaire-Student Version Appendix F.4. BEP Acceptability Questionnaire-Parent Version Appendix G.1. BEP Contract Appendix G.2. BEP Support Plan Appendix G.3. Functional Behavioral Assessment-Behavior Support Plan Protocol (F-BSP Protocol) Appendix G.4. Functional Assessment Checklist for Teachers and Staff (FACTS) Appendix H.1. High School BEP Referral Form Appendix H.2. High School Daily Plan Agenda Appendix H.3. Reinforcer Checklist for High School BEP
Hernando de Soto, in The Mystery of Capital (de Soto 2000), shows that the poor of the world have, in his terminology, assets vastly in excess of their capital. In one study, de Sotoâs associates surveyed neighborhoods in various poor countries, assessing the value of buildings which were not formally titled. The extrapolated value of just the informally owned buildings in the Third World amounted to $9.3 trillion â more than half the combined value of all publicly traded US companies. In identifying a crucial mystery â the failure of these assets to serve as capital for their owners â de Soto has identified a great opportunity for economic betterment.
Chapter 12 pulls together the different elements covered in the other chapters. Each chapter so far has inherent in it a contracting commandment. Following these commandments in an organized and business-like fashion leads to more effective contracting. In this final chapter, we will look at a framework for implementing these commandments. This approach is referred to as SMART Contracting TM . The acronym SMART stands for Strategically Managed, Aligned, degenerative, Transitional. SMART Contracting is a balanced approach that considers technical, legal, business and human issues in the development of more effective contracting approaches while recognizing the need to accommodate ongoing change. It is deliberately nonprescriptive. This means that we need to apply the principles and manage the detail depending on what we want to achieve and how much latitude we have to adapt corporate procedures. I feel that I have to apologize for the trademark. In a previous book I used other trademarked terms and was criticized for doing so by one reviewer. I am very sensitive to such criticism, especially if I agree with the comment! However, the trademark protects the term.
States and municipalities have privatized services in an effort to improve their costâeffectiveness and quality. Competition provides the logical foundation for an expectation of cost savings and quality improvements, but competition does not exist in many local marketplacesâespecially in the social services, where governments contract primarily with nonprofit organizations. As government increases its use of contracting, it simultaneously reduces its own publicâmanagement capacity, imperiling its ability to be a smart buyer of contracted goods and services. This article examines two questions about the privatization of social services based on interviews conducted with public and nonprofit managers in New York state: Does social services contracting exist in a competitive environment? And do county governments have enough publicâmanagement capacity to contract effectively for social services? The findings suggest an absence of competition and publicâmanagement capacity, raising the question of why governments contract when these conditions are not met.
Elections around the world have become a major international concern since the inception of modern democracy. It is a fact that the success of any democracy depends largely on its electoral process. In conducting a free and credible election, the process must be transparent to be adjudged credible. The electioneering process begins with the compilation of a voter register; this register contains the details of every eligible voter as stipulated by law or guild lines that guilds the electoral process. As part of what makes up, the guidelines are age restrictions for every intended voter. It is forbidding by law in most countries for a child to register as a voter, but this is not so in reality in most countries, especially in a developing nation. Because the age restriction is not obeyed, this has resulted in the incidences of underage voters and disputed election outcomes. This work provides an efficient and effective solution for the above concerns, using multiple digital solutions. The model will be integrating a deep learning Convolutional Neural Network (CNN), an Interplanetary File System (IPFS), and an Ethereum Smart Contract Blockchain. The role of the CNN is to detect any underage individual who intends to register as a voter. The CNN is built with a pretrained dataset, and it was trained with an age classifier that grouped the age on the images on the data set into eight distinct groups. This age grouping will help the age predictive algorithm estimate and place every image on the camera in a unique age group. This will only produce a binary result, which is "eligible to voter or not eligible to vote." This outcome is based on the preset threshold cut-off on the age group. The Interplanetary File System (IPFS) will provide a large storage capacity that will allow for off-chain data storage and still provide the model with all the functionalities and benefits of the blockchain. It also provides a hashing function that will assign and identify every registered voter with a unique cryptographic Identity. This ID will prevent the storage of the same information into the database, in so doing, eliminating multiple voting. Finally, the blockchain will provide a voting platform where the model will be implemented. It will allow every registered voter with a unique ID to create an account and vote on the blockchain. The adapted CNN was tested and evaluated and shows 85.9% performance accuracy, and when compared against two other age predictive models, it recorded an increase of 1.2%. In comparison, the complete digital solution model recorded 95.3% in performance. We believe this model will perform even better when subjected to further research work.
Open access
Science, Technology, and Education in Latin America
For the past 100 years or so the historical trend in the law of contracts has been to water down formal interpretive doctrines in favor of a more all-things-considered analysis of what the parties may have meant or what justice might require in the individual case. This trend away from formal and toward substantive interpretation of contracts has been alternately celebrated and criticized for over a century; and in recent years, a number of economically influenced scholars, in translating some of the classic arguments into economic language, have helped to clarify some of the traditional commentators' concerns. While this new economic analysis of formalism has been relatively successful in relating the traditional debates over formalism to specific transactional and institutional problems such as imperfect information and rent-seeking, however, it has fallen short along the dimension of advancing toward practical legal or policy recommendations. This essay, accordingly, proposes a different approach: one that focuses on private rather than public legal decisionmakers as a primary audience. In general, private lawmakers are likelier to be in a better position to make practical use of the economic analysis of contracts, in part because the detailed information that is necessary to implement such analysis intelligently is much likelier to be available at the individual level. Furthermore, there are many opportunities for contracting parties to choose between relatively formal and relatively substantive interpretive regimes. What is needed is a basic taxonomy of economic considerations that can serve as an organizing framework for parties choosing between form and substance when designing contracts; and the later part of the essay attempts to establish such a taxonomy.
In this paper, we address the issue of possible moral hazard that rating agencies might have. We discuss the feasibility of possible incentive contracts that can ameliorate this problem. We find, that incentive payments to the rating agency based on expected returns on debt will do away with the moral hazard problem.
The classical understanding of the law of obligations was founded on the idea that a sharp distinction could be drawn between contract and tort. Contractual obligations were believed to be voluntarily assumed, while obligations in tort were thought to be imposed by the courts. Despite decades of criticism, the classical view continues to be repeated in authoritative legal texts. Although the principal flaws in the classical model are widely understood, many judges and scholars still insist that at some fundamental level contract and tort can be distinguished. This paper is the first step in an attempt to understand that insistence and its implications. The goal of the paper is to demonstrate the persistence of the idea that contract can be sharply distinguished from tort and to provide a detailed account of the reasons why that distinction does not stand up to close scrutiny. The paper looks closely at aspects of contract law that are informed by the values and standards attributed to the law of tort. The idea that contractual obligations are voluntarily assumed is undermined by the objective approach to contract formation, the objective approach to contract interpretation and the extent to which default rules shape the parties' primary and secondary (or remedial) obligations. The idea that contracting parties tacitly consent to default rules by their failure to contract around them fails to provide a basis for distinguishing contract from tort. Lack of knowledge of default rules, disproportionate transaction costs and inequalities of bargaining power prevent many contracting parties from routinely choosing contract terms. If, despite those constraints, persons engaging in contractual behaviour can be said to consent to the legal consequences of that behaviour, we can equally say that legal actors engaging in other types of voluntary conduct consent to the obligations arising from that behaviour in the law of tort. The paper also considers aspects of tort law that are informed by considerations traditionally associated with the law of contract; namely, the extent to which obligations in tort can be voluntarily assumed and voluntarily limited or excluded. The paper shows that obligations in contract, like those in tort, are to a significant extent shaped by community standards. Contractual rights and obligations are to some extent shaped by consensus, to some extent imposed by one party on another and to some extent imposed on both parties by law. Similarly, obligations in tort are to some extent shaped by voluntary arrangements between the parties, to some extent shaped by the unilateral actions of one party and to some extent imposed by law.
This article sets out a normative theory to guide decisionmakers in the regulation of contracts between firms. Commercial law for centuries has drawn a distinction between mercantile contracts and others, but modern scholars have not systematically pursued the normative implications of this distinction. We attempt to cure this neglect by setting out the theoretical foundations of a law merchant for our time. Firms contract to maximize expected surplus and the state permits markets to function because markets maximize social welfare. Thus, there is a correspondence of interest between firms and the state, which implies that, when externalities are absent, the state should implement the preferences of firms regarding the rules that regulate their contracting behavior. A contract law for firms would differ in three major respects from current contract law. First, such a law would have far fewer default rules and standards than current contract law contains. The high level of generality on which much contract law is written (e.g., a party must behave "reasonably") creates unacceptable moral hazard for parties subject to it. Thus, firms in theory should, and in practice commonly do, contract out of much of the law most of the time. The primary effect of today's law, that is, is to raise transaction costs without altering substantive behavior. Second, the default theory of interpretation in a contract law for firms would require courts to base interpretations primarily on the written texts of agreements. The risks of incorrect interpretations that such a theory creates, we argue, would be more acceptable to firms than the costs that the courts' current interpretative practices create. Third, the law would contain almost no mandatory rules. To summarize, a modern law merchant would be much smaller than current contract law; would truncate broad judicial searches for parties' true intentions when interpreting their agreements; and would accord parties much more freedom to write efficient contracts than now exists.
We reconsider the optimal central banker contract derived in Walsh (1995). We show that if the government's objective function places weight (value) on the cost of the contract, then the optimal inflation contract does not completely neutralize the inflation bias. Furthermore, the more concerned the government is about the cost of the contract or the less selfish is the central banker, the smaller is the share of the inflation bias eliminated by the contract. Finally, a central banker contract written in terms of output can completely eradicate the inflationary bias, regardless of concerns about contract costs.
Limited observability is the assumption that economic agents can only observe a finite amount of information. Given this constraint, contracts among agents are necessarily finite and incomplete in comparison to the ideal complete contract that we model as infinite in detail. We consider the extent to which finite contracts can approximate the idealized complete contracts. The objectives of the paper are: (i) to identify properties of agents' preferences that determine whether or not finiteness of contracts causes significant inefficiency: (ii) to evaluate the performance of finite contracts against the ideal optimal contracts in principal-agent and bilateral bargaining models.
When circumstances surrounding the contract change, a party might consider breach a more attractive option than performance. Threatening breach, this party may induce the other party to modify the original agreement. The contract law doctrine of modification determines whether and when these modifications are enforceable. To promote social welfare as well as the interests of the threatened party, the law should enforce modifications if and only if the modification demand is backed by a credible threat to breach. This paper argues that credibility is not a function of pecuniary interests alone. A decision to breach can be motivated also by sentiments towards the fairness of the division of the surplus between the parties. A party whose share in the surplus is reduced in an unexpected fashion might have a credible threat to breach, even if his absolute payoff from performance is still positive and greater than his payoff from breach. The paper explores the patterns by which such fairness concerns arise. Recognizing the prevalence of these concerns suggests that modifications should be enforced in a larger set of circumstances than previously perceived. Lastly, the paper offers a fresh perspective on some of the landmark cases in the law of modification and duress.
Recent scholarship has described a venture capital cycle which finances start-up technology companies. This cycle, however, bears striking similarities with its counterpart in the old economy under which banks financed young firms. Indeed, with one notable exception, venture capital has introduced little innovation in financial contract design between financial intermediaries and entrepreneurs. The same approaches to information problems are used by banks and venture capital partnerships alike. The significant exception is the frequent use in venture capital finance of convertible instruments in the place of secured debt financing by banks. This paper explains (i) the functional similarity between venture capital and bank contracts with entrepreneurs and (ii) the valuable role played by convertible debt or preferred stock in technology start-ups.