Regulating Contract Formation: Precontractual Reliance, Sunk Costs, and Market Structure

This Article challenges the plausibility of the prospect of underinvestment in precontractual reliance (PCR). We argue that a negotiating party is motivated to invest in PCR not only through her expectation to extract the benefits that the investment yields (Added-Value Motivation), but also through the effect of the investment on her position vis-à-vis her competitors (Competition-Based Motivation). We demonstrate that under plausible assumptions, when a negotiating party operates in a relatively competitive market, the Competition-Based Motivation is frequently sufficient to induce optimal PCR, even without appropriate contractual provisions or legal intervention. We suggest several normative implications. First, legal intervention that is aimed at encouraging PCR is generally unwarranted. The forces of competition provide adequate investment incentives, and the regulation of contract formation should only facilitate their operation. We thus justify the reluctance of both positive law and commercial parties from imposing precontractual liability in cases of failed negotiations. Second, the analysis demonstrates that when one party (e.g., the supplier) operates in a competitive market of “professional” repeating players, the other party (e.g., the purchaser) is better off limiting the number of bidders (suppliers) with whom he negotiates. This result suggests that in such cases, from an efficiency perspective, a party (including a public authority) should be allowed to limit the number of suppliers with whom he conducts negotiations. By contrast, when suppliers operate in a competitive market of accidental, one-time players, the purchaser has an interest in encouraging excessive entry of suppliers into the negotiations, and legal intervention aimed at regulating the purchaser’s behavior can be justified. This result may justify, for instance, imposing a duty on employers to pay for training periods of potential employees. Third, legal intervention is justified in order to prevent manipulation of bidder’s assessment of their prospects to receive the contract. The analysis supports a rule that prohibits an auctioneer from receiving an offer that was submitted outside of the auction’s procedures, and a rule that disallows changing “the rules of the game” after the bidders already invested in PCR. Fourth, we show that when legal intervention is justified in the negotiation stage, the appropriate measure of damages that should be awarded is the plaintiff’s expectation interest. We also demonstrate that the difficulty in assessing this value when a contract is not formed can be resolved by approximating this value according to the sum of PCR for all bidders. Finally, we offer a new rationale for imposing disclosure duties (as well as other mandatory requirements to invest in PCR). We show that, in certain cases, such investment is allocated to the party who operates in a competitive market, even if it is efficient for the other party to bear this cost. Legal intervention is essential in such cases to resolve this inefficiency in the allocation of PCR. We refer in this respect to the case of Laidlaw v. Organ, and demonstrate why imposing a duty to disclose information is not expected to adversely affect a party’s incentive to invest in acquiring information

Why Do We Know What We Know? Reevaluating the Economic Case against Pre-Contractual Disclosure Duties and for Break-Up Fees

The economic analysis of contract law offers influential arguments against pre-contractual disclosure duties and for break-up fees, based on the presumption that pre-contractual duties are (or should be) set to provide sufficient incentives to optimally invest in acquiring information at the negotiation stage. We suggest, however, that the existing analysis is flawed, since it overlooks an important incentive for investing in information gathering. According to the conventional wisdom, a negotiating party will be motivated to invest resources in information gathering only on the basis of its expectation to extract the contractual surplus that the investment may generate. As a result, it is arguably essential to protect the investing party’s ability to benefit from its investment (by allowing non-disclosure) or to strengthen its bargaining position by guaranteeing reimbursement for the investment (break-up fees). However, contracting parties (e.g., the purchaser) invest resources in acquiring information not only—and probably not even primarily—to strengthen its bargaining position vis-à-vis its counterpart (e.g., the seller). Rather, the investment in acquiring information is often aimed at achieving an advantage vis-à-vis its competitors (e.g., other potential purchasers of the same asset), endeavoring to increase the investing party’s likelihood of forming a contract. Thus, even if the seller is able to extract all the contractual surplus generated by the investment, potential purchasers may well find it beneficial to invest in acquiring information to gain a competitive edge toward sealing a deal. In layman’s terms: a negotiator may invest in gathering information not only for the hope of sweetening the deal for herself, but also for the prospect of being able to submit a better offer to the other party. As a result, the argument of the existing literature against imposing a duty to disclose information and in favor of reimbursement provisions cannot be substantiated without a careful inquiry into competition-based motivations to gather information. Specifically, the analysis yields that, among other things, the exemption from disclosure cannot be justified on efficiency grounds in case of information that players in the relevant market regularly collect (e.g., examining the property that is offered for sale or interviewing potential job candidates). The competition-based motivation is insufficient, and legal protection is justified, only in the case of “exceptional” deliberately acquired information (e.g., searching for oil reserves or conducting a thorough job-screening through an extensive training program)

Remedies for Wrongfully-Issued Preliminary Injunctions: The Case for Disgorgement of Profits

This Article demonstrates that the underlying aim of remedies for wrongfully issued preliminary injuntion leads to two central conclusions. First, it is desirable to award the remedy of restitution, which requires the moving party to disgorge all the benefits obtained at the expense of the defendant as a result of the wrongfully-issued preliminary injunction. Second, it may be unjustified to compel the plaintiff to compensate the defendant for all harms inflicted by the wrongfully-issued preliminary injunction. Part I of this Article summarizes the law of remedies for wrongfully-issued preliminary injunctions. Part I.A surveys the doctrinal reasons for imposing on the moving party only partial liability for the defendant\u27s harms, while Part I.B presents the very limited availability of the remedy of restitution for wrongfully-issued preliminary injunctions under current law. Part II lays the theoretical ground for the analysis. Part II.A discusses the underlying purpose behind issuing a preliminary injunction: the minimization of the irreparable loss of rights resulting from an erroneous assignment of entitlements at the preliminary stage. Part II.B presents the standard for issuing a preliminary injunction. Part II.C analyzes the possible paths by which the remedy for wrongfully-issued preliminary injunctions achieves this aim. Part III deals with the ex-post perspective, and shows that the remedy of restitution is better suited to achieve the aim of minimizing irreparable social harms. Part IV inquires into the role remedies for wrongfully-issued preliminary injunctions play in shaping the parties\u27 incentives in deciding whether to apply for a preliminary injunction, and shows the superiority of the restitutionary remedy in this respect

Illuminating the life of GPCRs

The investigation of biological systems highly depends on the possibilities that allow scientists to visualize and quantify biomolecules and their related activities in real-time and non-invasively. G-protein coupled receptors represent a family of very dynamic and highly regulated transmembrane proteins that are involved in various important physiological processes. Since their localization is not confined to the cell surface they have been a very attractive "moving target" and the understanding of their intracellular pathways as well as the identified protein-protein-interactions has had implications for therapeutic interventions. Recent and ongoing advances in both the establishment of a variety of labeling methods and the improvement of measuring and analyzing instrumentation, have made fluorescence techniques to an indispensable tool for GPCR imaging. The illumination of their complex life cycle, which includes receptor biosynthesis, membrane targeting, ligand binding, signaling, internalization, recycling and degradation, will provide new insights into the relationship between spatial receptor distribution and function. This review covers the existing technologies to track GPCRs in living cells. Fluorescent ligands, antibodies, auto-fluorescent proteins as well as the evolving technologies for chemical labeling with peptide- and protein-tags are described and their major applications concerning the GPCR life cycle are presented

A Government of Laws, not of Men

The Israeli Supreme Court will hear this week (on September 12, 2023) petitions to invalidate an amendment to one of Israel’s Basic-Laws. The amendment, enacted in late July, denies the court the power to review the “reasonableness” of any governmental decision. This amendment is the first part of larger judicial overhaul plan, initiated by the Israeli government. Based on the court’s existing jurisprudence, I expect that the Supreme Court will declare the amendment unconstitutional, as it violates the core principle of the rule of law. In this post I offer a brief overview of the relevant background, before addressing the merits of the current case.</p

Who benefits from the uniformity of lawyer's contingent fee rates?

Lawyers’ Contingent Fee (CF) rates are rather uniform, often one-third of the recovery. Arguably, this uniformity is a type of anti-competitive price-fixing, which results in clients paying supra-competitive fees. This paper challenges this argument. It shows that uniform CF rates provide clients with an important advantage, as suchthey rates enable them to make a de facto “take-it-or-leave-it” offer. Consequently, lawyers cannot exploit their private information, and clients retain the transaction’s entire surplus and may hire the best lawyer among those who find it profitable to handle the case. The paper also addresses the effect of uniformity of CF rates when lawyers refer cases to other lawyers. It shows that uniformity facilitates matching of clients and lawyers through the referral system. It also demonstrates that the fact that both direct clients and those obtained through paid-for referrals pay the same CF rate does not attest to cross-subsidization. The clients whose cases are transferred for a referral fee (paid by the handling lawyer) “pay” for the referral service by obtaining a less highly ranked lawyer

Dramatiser l'amélioration humaine : comment transformer un débat moral et social sur une technologie futuriste en un scénario de série télévisée

This PhD dissertation is a “research-through-creation” project, which set out to explore and gain insights from the process of writing a science fiction TV series pilot screenplay, that deals with the morally charged subject of human enhancement.Science fiction is a very important genre in today's rapidly changing world, with its continuously advancing technology. Science fiction novels, movies and TV series play a major role in creating a social, moral and cultural discourse about how we, as humanity, can and should deal with current and future technologies and lead the way we evolve. Human enhancement is one of the major technologies which' potential evolvement could disrupt and change society and humanity in a significant way by offering humankind the possibility to transcend natural selection and control how it will develop. The science fiction writer is in a unique position in which he/she needs to mediate science, technology and their psychological, moral and social possibilities in the form of story and drama. When done so successfully, the science fiction writer's work can offer value by contributing to the social discourse. Researching this unique position, between science, social relevance and storytelling, is at the heart of this work. Its objective is to articulate insights and conceptualizations for the considerations, actions and creative decisions required to accomplish this kind of a challenge.To do so I have written two science fiction TV pilot screenplays, an earlier version and a later version. In parallel, I have studied the subject of human enhancement both for its scientific aspect and its philosophical and social aspect, and also studied about the theory and practice of science fiction writing, with an emphasis on stories that deal with human enhancement and current science fiction TV series. The two lines of work inter-related and complement each other.The study of human enhancement and science fiction took part in the progression of the writing from the initial screenplay to the final one, which is considered by me to be more satisfactory in achieving both a good representation of the social and moral issues of human enhancement, and in fulfilling the dramatic potential of the subject.This dissertation includes the screenplays and other creative materials, preceded by a critical essay which describes the study of human enhancement and science fiction, and analyzes the development of the writing process leading up to the final screenplay. The insights gained from the research highlight the importance of the science fiction writer's understanding of the technology he writes about (or the “novum” – the technological/scientific difference-maker); creating a story premise which as a derivative of the technology; exploring the different moral, psychological and social aspects of the chosen technology and translating those to story conflicts and character motivations; and making story-world decisions that best serve the thematic issues the writer wants to convey.Cette thèse de doctorat est un projet de «recherche à travers la création», qui a pour objectif d'explorer et d'éclairer le processus d'écriture d'un scénario pilote de série télévisée de science-fiction, qui traite du sujet moralement chargé de l'amélioration humaine.La science-fiction est un genre très important dans le monde en évolution rapide, avec sa technologie en constante évolution. Les romans de science-fiction, les films et les séries télévisées jouent un rôle majeur dans la création d'un discours social, moral et culturel sur la façon dont nous, en tant qu'humanité, pouvons et devons faire face aux technologies actuelles et futures et diriger notre évolution. L'amélioration humaine est l'une des technologies majeures dont l'évolution potentielle pourrait bouleverser et transformer la société et l'humanité de manière significative en offrant à l'humanité la possibilité de transcender la sélection naturelle et de contrôler son évolution.L'écrivain de science-fiction occupe une position unique dans laquelle il doit médier la science, la technologie et leurs possibilités psychologiques, morales et sociales sous forme d'histoire et de théâtre. Une fois réalisé avec tant de succès, le travail de l'écrivain de science-fiction peut offrir une valeur ajoutée en contribuant au discours social.La recherche de cette position unique, entre science, pertinence sociale et narration, est au cœur de ce travail. Son objectif est d'articuler des idées et des conceptualisations pour les considérations, les actions et les décisions créatives nécessaires pour accomplir ce type de défi.Pour ce faire, j'ai écrit deux scénarios de pilotes de télévision de science-fiction, une version antérieure et une version ultérieure. En parallèle, j'ai étudié le sujet de la valorisation humaine tant du point de vue scientifique que philosophique et social, ainsi que de la théorie et de la pratique de l'écriture de science-fiction, en mettant l'accent sur les récits traitant du développement humain et de la science-fiction actuelle. Séries télévisées. L'étude de l'amélioration humaine et de la science-fiction a contribué à la progression de l'écriture, du scénario initial au dernier, ce que j'estime plus satisfaisant pour atteindre les deux objectifs. une bonne représentation des enjeux sociaux et moraux de la valorisation humaine et de la réalisation du potentiel dramatique du sujet.Cette thèse comprend les scénarios et autres supports créatifs, précédés d'un essai critique qui décrit l'étude du perfectionnement humain et de la science-fiction, et analyse l'évolution du processus d'écriture menant au scénario final.Les enseignements tirés de la recherche soulignent l'importance de la compréhension de l'écrivain de science-fiction de la technologie sur laquelle il écrit (ou du «novum» - le créateur de différence technologique / scientifique); créer une prémisse d'histoire qui dérive de la technologie; explorer les différents aspects moraux, psychologiques et sociaux de la technologie choisie et les traduire en conflits d'histoire et en motivations de caractère; et prendre des décisions du monde de l'histoire qui répondent le mieux aux questions thématiques que l'auteur veut transmettre