345,121 research outputs found
Writing an Escalation Contract Using the Consumer Price Index
[Excerpt] Each year thousands of people write contracts with escalation clauses that are tied to the Consumer Price Index (CPI). Escalation contracts call for an increase in some type of payment in the event of an increase in prices. These contracts are used in a wide variety of ways, from adjusting rent prices to adding cost-of-living adjustments to alimony payments and wage contracts. Unfortunately, many escalation contracts tied to the CPI are vague. For example, a contract may stipulate that “the Consumer Price Index (CPI) be used to escalate an apartment rent, but the Bureau of Labor Statistics (BLS) publishes thousands of CPIs each month, so a more carefully worded contract could minimize ambiguity and the likelihood of future disputes. This issue of BEYOND THE NUMBERS can help those who use the CPI to write escalation clauses to create a more comprehensive contract
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Insufficient Incentives for Investment in Electricity Generation
In theory, competitive electricity markets can provide incentives for efficient investment in generating capacity. We show that if consumers and investors are risk averse, investment is efficient only if investors in generating capacity can sign long-term contracts with consumers. Otherwise the uncovered price risk increases financing costs, reduces equilibrium investment levels, distorts technology choice towards less capital-intensive generation and reduces consumer utility. We observe insufficient levels of long-term contracts in existing markets, possibly because retail companies are not credible counter-parties if their final customer can switch easily. With consumer franchise, retailers can sign long-term contracts, but this solution comes at the expense of the idea of retail competition. Alternative capacity mechanisms to stimulate investment are discussed
CASH MARKET OR CONTRACT? HOW TECHNOLOGY AND CONSUMER DEMAND INFLUENCE THE DECISION
The use of contracts for producing and marketing agricultural commodities has become nearly universal in some sectors. Two factors are most frequently cited as being responsible for the use of agricultural contracts. The first, a demand-side factor, is the development of strong consumer preferences for specific qualities. The second, a supply-side factor, is technological change. In this paper, we use a principal agent framework to model how consumer demand and technology enter into a firm's decision to use contracts or the cash market.Demand and Price Analysis, Marketing,
Does it pay to read your junk mail? evidence of the effect of advertising on home equity credit choices
We examine the effect of direct mail (commonly referred to as junk mail) advertising on individual financial decisions by studying consumer choice of home equity debt contracts. Consistent with the theoretical predictions, we find that financial variables underlying the relative pricing of debt contracts are the leading factors explaining consumers home equity debt choice. Furthermore, we also find that the intended use of debt proceeds significantly impacts consumer choice. However, when we study a subset of consumers who received a direct mail solicitation for a particular debt contract (fixed versus adjustable-rate), we find evidence that the relative pricing variables are less relevant in explaining consumer contract choice, even though they were presented with a full menu of debt contracts. Thus, our results are consistent with the persuasive view of advertising.Home equity loans ; Advertising
Making Sense of Non-Binding Retail-Price Recommendations
This paper provides a theoretical rationale for non-binding retail price recommendations (RPRs) in vertical supply relations. Analyzing a bilateral manufacturer-retailer relationship with repeated trade, we show that linear relational contracts can implement the surplusmaximizing outcome. If the manufacturer has private information about production costs or consumer demand, RPRs may serve as a communication device from manufacturer to retailer. We characterize the properties of efficient bilateral relational contracts with RPRs and discuss extensions to settings where consumer demand is affected by RPRs, and where there are multiple retailers or competing supply chains.vertical relationships, relational contracts, asymmetric information, price recommendations
New York\u27s Plain English Law
New York was the first state to pass a law requiring that contracts governing consumer transactions be written in plain English, as opposed to legalese. This Note examines the effect of New York\u27s Plain English Law on consumer transactions as well as the Law\u27s reception by lawyers and consumers
THE EFFECTS ON PEASANT HOUSEHOLDS OF ACCESS TO FORMAL DEPOSITS AND LOANS
A dynamic, stochastic, rational expectations model of a peasant household with access to deposits and loans (up to a credit limit) is solved and simulated. If formal contracts offer more favorable rates than informal contracts, then access to formal contracts increases average consumption and decreases its standard deviation.Agricultural Finance, Consumer/Household Economics,
Mandatory Arbitration for Customers But Not for Peers: A Study of Arbitration Clauses in Consumer and Non-Consumer Contracts
We conducted a study of contractual practices by well-known firms marketing consumer products, comparing the firms\u27 consumer contracts with contracts the same firms negotiated with business peers. The frequency of arbitration clauses in consumer contracts has been studied before, as has the frequency of arbitration clauses in non-consumer contracts. Our study is the first to compare the use of arbitration clauses within firms, in different contractual contexts.
The results are striking: in our sample, mandatory arbitration clauses appeared in more than three-quarters of consumer contracts and less than one tenth of non-consumer contracts (excluding employment contracts) negotiated by the same firms. This suggests that the firms\u27 faith in arbitration is considerably weaker than they have claimed. For the purpose of business-to-business disputes, in which they may be either plaintiffs or defendants, they prefer the option to litigate in court
Smart Contracts and the Illusion of Automated Enforcement
This Essay explores the barriers to deploying smart contracts in the consumer finance space: the humans themselves, existing consumer protection laws, and the other businesses which have financial contracts with consumers but that cannot deploy smart contracts. These three barriers render perfectly automated enforcement all but impossible. Nevertheless, there may be room for modifiable smart contracts in the consumer finance space – although these contracts may be only marginally more efficient than traditional contracts
Form Contracts under Revised Article 2 (Symposium: Consumer Protection and the Uniform Commercial Code)
The current draft of section 2-206 in Revised Article 2 of the Uniform Commercial Code ( UCC ) entitled Consumer Contract: Standard Form 1 presents a unique and threatening challenge to the drafters of consumer form contracts. In earlier drafts, one part of the section applied to both to commercial contracts and consumer contracts. It required that one manifest assent to any form contract, commercial or consumer, in order for it to be binding.2 Bowing to commercial opposition in the most recent version, the drafters have omitted all reference to commercial contracts. As the section stands, it applies only to consumer contracts
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