CONTRACTS & COMMERCIAL LAW eJOURNAL
DAVID MCLAUCHLAN, Victoria University of Wellington - Faculty of Law
Despite claims that the modern approach to interpretation of contracts has usurped much of its function, the equitable jurisdiction to rectify a written contract on the ground of common mistake remains one of the most practically important areas of the law of contract. Rectification claims are a regular feature of modern commercial litigation, very often of course in tandem with interpretation disputes. Unfortunately, however, recent cases demonstrate that the law governing this form of equitable relief has become extraordinarily, and needlessly, complex. The purpose of this article is to suggest that this complexity can be resolved by returning to first principles of the law of contract formation, particularly those concerning the meaning of the objective test and the relevance of the partiesâ€™ actual or subjective intentions.
"Brazil's Landmark Clean Companies Act: Comparison to the OECD Anti-Bribery Convention and Issues"
SONIA ZAHEER, Pacific McGeorge Global Business & Development Law Journal
Corruption in the international marketplace remains an endemic problem. The U.S. government estimates that bribery affects competition for international commercial contracts worth billions of dollars each year. Astonishingly, big names, some of which enjoy a generally good reputation, appear on the list of companies who have allegedly engaged in bribery of foreign public officials. This list includes Alcoa World Alumina LLC, Walmart, AG Simons, Halliburton, Lucent Technologies, Chevron, BAE Systems PLC, Baker Hughes, Monsanto, Titan Corporation, Triton Energy Limited, Avon Products, and Invision Technologies.
Bribery on international level results in many grave consequences. It distorts markets, hinders economic development and undermines democratic accountability. It inflicts massive costs on countries, causes misallocation of resources, distorts public policy, and undermines enforcement of rule of law. It hurts those companies that choose to follow the law and rightfully refuse to participate in bribery of others. Bribery in the international marketplace also severely threatens global security as it enables transnational crimes including drug trafficking and money laundering.
On August 1, 2013, Brazil enacted the Clean Companies Act (the Brazilian Act), placing administrative and civil liability on legal entities engaging in bribery of public officials. The new Act went into effect on January 29, 2014. This is a landmark development for several reasons. Brazil is the sixth largest economy in the world, ranked by GDP. It is also the largest and one of the most robust economies in Latin America, an area that is of special significance for U.S. companies conducting business on international level. Meanwhile, corruption is a widespread and long-rooted phenomenon in Brazil. According to some studies, corruption costs the country approximately $40 billion each year. In 2012, Transparency International ranked Brazil as the 69th most corrupt country, out of 174 countries, on its International Corruption Perceptions Index. This rank shows that the nation has "significant problems with corruption." Despite such prevalence of corruption in Brazil, before the enactment of the Clean Companies Act, Brazilâ€™s express laws only held individuals liable for engaging in bribery of public officials, not legal entities. Because Brazil has signed on to the Organization for Economic Co-operation and Developmentâ€™s (OECDâ€™s) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention), the OECDâ€™s Working Group is scheduled to review the new Brazilian Act in June 2014 and issue its report on whether the law meets the Conventionâ€™s requirements.
This Comment argues that while the provisions of the new Brazilian Act generally conform to or exceed those of the OECD Anti-bribery Convention, whether Brazil will actually and properly enforce the law will determine if Brazil will meet OECDâ€™s expectations and those of its people. This Comment enumerates three key steps Brazil should take in order to effectively enforce its new law. Part II of this Comment explores the evolution of anti-bribery laws on the international level, the OECDâ€™s role, and circumstances behind enactment of Brazilâ€™s Clean Companies Act. Part III compares each provision of the OECDâ€™s Anti-bribery Convention to those of the Clean Companies Act and concludes that the Brazilian law meets each provision except Enforcement. Part IV proposes three key steps that Brazil should take in order to effectively enforce its new law. Specifically, Brazil should make it a top priority to aggressively and objectively investigate and prosecute cases of bribery of public officials. It should ensure that all of the enforcement agencies across Brazil adopt uniform procedures and interpretations of the law. Lastly, it should collaborate with other countries in investigations and prosecutions.
"Government Budgets as the Hunger Games: The Brutal Competition for State and Local Government Resources Given Municipal Securities Debt, Pension and OPEB Obligations, and Taxpayer Needs"
Review of Banking and Financial Law, Forthcoming
CHRISTINE SGARLATA CHUNG, Albany Law School
This article examines how obligations associated with public employment (including pensions and OPEB) and obligations associated with complex financial instruments (including derivatives) fit into the puzzle of local government fiscal health. As the recent experiences of Detroit and other distressed municipalities suggest, pension and OPEB obligations and obligations associated with complex, non-traditional securities can strain local government resources, particularly when accompanied by corruption and/or macroeconomic distress. Focusing on the federal securities laws, I advocate for reforms designed to (i) standardized and require compliance with uniform accounting standards in the public sector, so that stakeholders can assess municipal fiscal heath and identify challenges to fiscal stability; (ii) create a data collection resource and oversight body to help identify and manage risks associated with complex financial instruments, (iii) create a data collection resources and oversight body to help identify and management risks associated with public employee compensation (particularly pensions and OPEB), and (iv) expand the reach of the fiduciary standard to a broader range of stakeholders involved in local government financial decision-making, including public officials, underwriters and certain derivatives counterparties.
"Payment after Actavis"
Iowa Law Review, Forthcoming
MICHAEL A. CARRIER, Rutgers University School of Law - Camden
One of the most pressing issues in patent and antitrust law involves agreements by which brand-name drug companies pay generic firms to delay entering the market. In FTC v. Actavis, the Supreme Court held that these settlements could violate the antitrust laws.
In the wake of the decision, courts, the parties, and commentators have been fiercely debating the question of what constitutes a payment, with courts reaching divergent outcomes. This Article offers a framework that answers this question.
It first articulates two justifications based on litigation costs and brand payments for generic services. It then introduces a test based on whether the brand conveys to the generic a type of consideration not available as a direct consequence of winning the lawsuit. Such a showing â€” accompanied by a finding of an exclusion payment that violates the antitrust laws â€” demonstrates that the genericâ€™s exclusion from the market is based on the payment rather than the patent. And because the brand would not be able to provide such consideration even if a court found that the patent was valid and infringed, the test allows courts to (as Actavis instructed) avoid wading into the patent merits in the vast majority of cases.
Applying the framework, the Article finds that the test is satisfied when generics delay entering the market after receiving cash, â€śpoison pillâ€? clauses allowing the acceleration of generic entry, and brand agreements not to introduce their own generics. In contrast, the test is not satisfied when the brand forgives damages accrued by a generic that has entered the market.
The test, in other words, solves the puzzle articulated by Judge Posner that every settlement provides something of value to the generic. And it offers a framework that resolves a contentious issue with significant consequences for health care and the economy while being consistent with common sense, economics, and the policies underlying the relevant legal regimes.
"Crowdfunding Human Capital Contracts: Can it Be Done?"
Cardozo Law Review, Forthcoming
MAX VOGEL, Benjamin N. Cardozo School of Law
The CROWDFUND Act has the potential to alter the way students finance their higher education. Yet, the statutory requirements imposed on issuers create uncertainty as to the Actâ€™s effectiveness in this regard. Students assessing their financial aid options for college will need to carefully weigh the costs of borrowing money through traditional federal loans versus the costs of crowdfunding human capital contracts. In all likelihood, without the ability to spread any of the costs associated with crowdfunding human capital contracts, students will continue to primarily utilize federally funded student loans. That is, unless, as this Note proposes, funding portals assume the cost of facilitating student pools, in order to lower the costs for students. These portals can engineer â€śoff the shelfâ€? LLCs that can be specifically tailored to the crowdfunded human capital contract industry. If funding portals can successfully maintain such an operation, traditional student loans may begin to fall by the wayside.
"Neutrality 2.0: The Broadband Transition to Transparency"
JUSTIN BROWN, University of South Florida
ANDREW W. BAGLEY, University of Maryland University College
During the last decade, broadband deployment, speed and utility have increased, allowing the public to engage in new forms of social media, user-generated content, voice and video calling, citizen journalism and accessing audio and video streams supplied by edge providers like Pandora and Netflix. Concurrently, during this same period, concerns over open access and network neutrality have focused on whether broadband service providers may be regulated, ostensibly to which degree may they have control over their networks and face common carrier obligations, even if they do not fall under the classification of telecommunications services .
To help clarify these issues, in 2010 the Federal Communications Commission established the â€śOpen Internet Rulesâ€? calling for three network management principles centered on antiblocking, nondiscrimination and transparency requirements to apply to broadband providers. Recently, in Verizon v. FCC, the D.C. Circuit Court of Appeals vacated the antiblocking and nondiscriminatory provisions but left the transparency requirements in tact for both fixed and wireless broadband providers.
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Contracts & Commercial Law eJournal
William K. Townsend Professor of Law, Yale University - Yale Law School, Yale University - Yale School of Management
RANDY E. BARNETT
Carmack Waterhouse Professor of Legal Theory, Georgetown University Law Center
LISA E. BERNSTEIN
Wilson-Dickinson Professor of Law & Co-Director, Institute for Civil Justice, University of Chicago Law School
CLAYTON P. GILLETTE
Max E. Greenberg Professor of Contract Law, New York University School of Law
ROBERT A. HILLMAN
Edwin H. Woodruff Professor of Law, Cornell Law School
AVERY W. KATZ
Milton Handler Professor of Law, Columbia University - Law School
RANDAL C. PICKER
Leffmann Professor of Commercial Law; Senior Fellow, The Computation Institute of the University of Chicago and Argonne National Laboratory, University of Chicago - Law School
Sterling Professor of Law, Yale Law School
MICHAEL J. TREBILCOCK
Professor and Chair in Law and Economics, University of Toronto - Faculty of Law
Leo E. Gottlieb Professor of Law, Harvard Law School